Quantity discounts offered by a monopolist are considered in the context of a bargaining problem in which the buyer and seller negotiate over the order quantity and the average unit price. All-units and incremental quantity discounts that permit transactions at a negotiated outcome are described. The effect of risk sensitivity and bargaining power on quantity discounts are discussed for alternative bargaining models.
Kohli, Rajeev, and Heungsoo Park. "A Cooperative Game-Theory Model for Quantity Discounts." Management Science 35, no. 5 (June 1989): 693-70.
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