Monopolistic price setting under fuzzy information

Monopolistic price setting under fuzzy information

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Article ID: iaor20051798
Country: Netherlands
Volume: 154
Issue: 3
Start Page Number: 787
End Page Number: 803
Publication Date: May 2004
Journal: European Journal of Operational Research
Authors: , ,
Keywords: fuzzy sets
Abstract:

We consider a profit maxmizing monopolistic firm that sets prices in the presence of improper information about the demand for its products. This information deficiency is viewed as being vagueness rather than stochastic uncertainty and modelled by a family of fuzzy sets. Applying a defuzzification strategy that explicitly takes the firm's attitude towards deviations of actual demand from its most possible values into account, we derive explicit solutions to the maximization problem of a single-product and a general multi-product firm. Furthermore, some comparative static results are established.

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