<p>The motivation for this assumption is to have a unique solution. In this article, it is necessary to prove the 1st lemma, i.e. the quasi-concavity of the profit function.  You find a similar motivation in Tirole’s book (Industrial Organization, p. 156).</p>

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2018-11-07T15:17:29.480Z
2018-11-07T15:17:29.480Z
Yann
<p>I was reading this article on advance purchase discounts and pricing in which the author uses the monotone hazard rate assumption. Why does the author use it?</p>

<p>The article is <em>Advance-purchase discounts as a price discrimination device</em> (<a href="http://www.frankrosar.de/mediapool/135/1350549/data/nockepeitzrosar_apd_2011.pdf" rel="nofollow noreferrer">PDF</a>) by Nocke Peitz and Rosar</p>

<p>Below you can find a screenshot of the part in question.</p>

<p>Thank you very much!</p>

<p><a href="https://i.sstatic.net/LbGuQ.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/LbGuQ.png" alt="enter image description here"></a></p>

<microeconomics><game-theory><pricing><price-discrimination>
What is the monotone hazard rate assumption used for?
AnderssonStock
# What is the monotone hazard rate assumption used for?

(Asked by: username_0 on 2018-11-07)

I was reading this article on advance purchase discounts and pricing in which the author uses the monotone hazard rate assumption. Why does the author use it?

The article is *Advance-purchase discounts as a price discrimination device* ([PDF](http://www.frankrosar.de/mediapool/135/1350549/data/nockepeitzrosar_apd_2011.pdf)) by Nocke Peitz and Rosar

Below you can find a screenshot of the part in question.

Thank you very much!

[![enter image description here](https://i.sstatic.net/LbGuQ.png)](https://i.sstatic.net/LbGuQ.png)

**Tags:** microeconomics, game-theory, pricing, price-discrimination


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## 1 answers

### Answer by username_1 on 2018-11-07. Score: 2

The motivation for this assumption is to have a unique solution. In this article, it is necessary to prove the 1st lemma, i.e. the quasi-concavity of the profit function. You find a similar motivation in Tirole’s book (Industrial Organization, p. 156).


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