Chaotic Discrimination and Non-Linear Dynamics
DOI : 10.3844/ajassp.2005.440.442
American Journal of Applied Sciences
Volume 2, Issue 1
This study examines a particular form of price discrimination, known as chaotic discrimination, which has the following features: sellers quote a common price but, in reality, they engage in secret and apparently unsystematic price discounts. It is widely held that such forms of price discrimination are seriously inconsistent with profit maximization by sellers.. However, there is no theoretical salience to support this kind of price discrimination. By straining the logic of non-linear dynamics this study explains why such secret discounts are chaotic in the sense that sellers fail to adopt profit-maximising price discounts. A model is developed to argue that such forms of discrimination may derive from the regions of instability of a dynamic model of price discounts.
© 2005 Partha Gangopadhyay. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.