Risk, discounts and the pricing of indivisible goods

J. Luis Guasch, Robert Clifford Marshall

Research output: Contribution to journalArticle

Abstract

We analyze the effect that indivisibilities have on the pricing of goods under imperfect information. We show that risk bearing arguments alone can account for the lower prices per unit of consumption or service of larger indivisible goods or size discounts. This result holds whether or not there are economies of scale in the production of larger goods.

Original languageEnglish (US)
Pages (from-to)43-46
Number of pages4
JournalEconomics Letters
Volume17
Issue number1-2
DOIs
StatePublished - Jan 1 1985

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All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

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