Research Article Open Access

Chaotic Discrimination and Non-Linear Dynamics

Partha Gangopadhyay

Abstract

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.

American Journal of Applied Sciences
Volume 2 No. 1, 2005, 440-442

DOI: https://doi.org/10.3844/ajassp.2005.440.442

Submitted On: 9 November 2005 Published On: 31 January 2005

How to Cite: Gangopadhyay, P. (2005). Chaotic Discrimination and Non-Linear Dynamics. American Journal of Applied Sciences, 2(1), 440-442. https://doi.org/10.3844/ajassp.2005.440.442

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Keywords

  • Nash Equilibrium
  • Price Discrimination
  • Fixed Points
  • Stability