Why do restaurants serve lunch cheaper than dinner?

Article

Watanabe, Taiji. 2015. "Why do restaurants serve lunch cheaper than dinner?" Journal of Revenue and Pricing Management. 14 (4), pp. 293-295. https://doi.org/10.1057/rpm.2015.25
Article Title

Why do restaurants serve lunch cheaper than dinner?

ERA Journal ID41054
Article CategoryArticle
Authors
AuthorWatanabe, Taiji
Journal TitleJournal of Revenue and Pricing Management
Journal Citation14 (4), pp. 293-295
Number of Pages3
Year2015
PublisherSpringer
Place of PublicationUnited Kingdom
ISSN1476-6930
1477-657X
Digital Object Identifier (DOI)https://doi.org/10.1057/rpm.2015.25
Web Address (URL)http://www.palgrave-journals.com/doifinder/10.1057/rpm.2015.25
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.

Keywordsrestaurant pricing behaviour; oligopolistic pricing; exploitation of reservation prices; convex demand curve
ANZSRC Field of Research 2020380304. Microeconomic theory
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Byline AffiliationsSchool of Commerce
Institution of OriginUniversity of Southern Queensland
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