For products where the firm has market power,coordination in the supply chain can be achieved and supply chain profits maximized through the use of
A)two-part tariffs or volume based quantity discounts.
B)marginal unit quantity discounts.
C)all unit quantity discounts.
D)basic quantity discounts.

Question

Quizplus · Accepted Answer

Two-part tariffs or volume based quantity discounts are the best choices for products where the firm has market power. This is because these pricing strategies allow the firm to capture a larger share of the surplus in the supply chain by charging a fixed fee or a higher price for the first unit purchased and a lower price for subsequent units. This incentivizes buyers to purchase more units, which in turn increases the firm's revenue and profits. Marginal unit quantity discounts, all unit quantity discounts, and basic quantity discounts may not be effective in maximizing supply chain profits in cases where the firm has market power.

For Products Where the Firm Has Market Power,coordination in the Supply