Monopolistic price setting under fuzzy information
We consider a profit maximizing monopolistic firm that sets prices in the presence of improper information about the demand for its products. This information deficiency is viewed as being vagueness rather than stochastic uncertainty and modelled by a family of fuzzy sets. Applying a defuzzification strategy that explicitly takes the firms attitude towards deviations of actual demand from its most possible values into account, we derive explicit solutions to the maximization problem of a single-product and a general multi-product firm. Furthermore, some comparative static results are established.
pricing fuzzy sets multi-product firm economics demand uncertainty