Kyungmin Kim from Emory University will present “The Limits of Monopoly Pricing and Positioning” joint work with Nenad Kos (Bocconi)

Abstract: We consider the monopoly problem in Hotelling’s linear city model and study the extent to which the market outcome depends on the distribution of consumers. Specifically, we characterize the monopoly firm’s profit guarantee---the lowest profit it would achieve under any distribution---and explicitly construct a (seller-worst) distribution that yields the lowest profit. We also characterize an essentially unique (consumer-optimal) distribution that maximizes consumer surplus.