Second-Degree Monopoly Wholesaler with Variable Ordering Costs

Abstract

Ordering costs are usually considered as fixed costs. For the case of one seller and two_x000D_ identical buyers, we examine ordering charges that are proportional to the number of units_x000D_ ordered. We find that no extra profits will be generated, neither for the producer nor for the_x000D_ retailers. Thus, proportional ordering costs are not economically justified.