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Journal of Revenue and Pricing Management

, Volume 14, Issue 4, pp 293–295 | Cite as

Why do restaurants serve lunch cheaper than dinner?

  • Taiji Watanabe
Thoughts

Abstract

The article explores a question why restaurants serve lunch meals cheaper than dinner meals. Departing from traditional demand curves derived from utility functions, the article uses a distribution function of reservation prices of patrons to represent a market demand curve. Given identical convex market demand curves in two distinct markets isolated by the time, restaurants exploit the convexity of the market demand curves by setting two prices whose average price is higher than the competitive market equilibrium price. This exploitation opportunity induces restaurants to adopt oligopolistic pricing behaviours.

Keywords

restaurant pricing behaviour oligopolistic pricing exploitation of reservation prices convex demand curve 

Notes

References

  1. Currie, C.S.M. (2015) How far will the airline model stretch? Journal of Revenue and Pricing Management 14 (2): 120–122.CrossRefGoogle Scholar
  2. Nalebuff, B. (1988) Puzzles blockades, carrier missions, secret intelligence, and more. Journal of Economic Perspectives 2 (4): 181–189.CrossRefGoogle Scholar

Copyright information

© Palgrave Macmillan, a division of Macmillan Publishers Ltd 2015

Authors and Affiliations

  1. 1.School of Commerce, University of Southern QueenslandDarling HeightsAustralia

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