Buyer symmetry in monopoly

For a price-setting monopolist, the aggregate demand curve sufficiently summarizes the demand environment. The distribution of demand, namely how the demand is distributed among the buyers, is not relevant. But intuitive notions of strong versus weak buyers suggest that the distribution of demand should be relevant to a monopolist. This paper provides a formal justification for such notions. Using cooperative game theory to model monopoly without an a priori assumption of price-setting power, the paper shows that a seller will always prefer unitary demand, thus implying that the demand distribution does affect how a monopolist assesses the demand environment. Furthermore, if the number of buyers is kept fixed, a seller always prefers that, when feasible, the buyers be symmetric, namely that they have the same individual demand curves. This result holds for all capacity choices of the seller, implying that buyer symmetry is always the most preferred distribution of demand.