Application of Financial Mathematical Models in Optimal Pricing Decisions of Monopoly Firms

The pricing decisions of monopoly firms represent a core problem in industrial organization and financial economics, which has significant impaction for market efficiency and consumer welfare. When markets evolve from traditional industrial structures to digital ecosystems, the mathematical modeling of monopoly pricing becomes more sophisticate. Incorporating game-theoretic frameworks, stochastic processes, and optimization techniques. This paper studies how financial mathematical models can support monopoly firms in setting optimal prices. By using the method of comparative analysis, it mainly discusses Cournot competition model, Hotelling spatial competition model, and how these two models are adjusted for adapting to today's market environment. The analysis shows that classical models provide basic understandings into equilibrium pricing under different competitive situations. However, we cannot use these models directly for digital or resources focused markets. People need to change them to consider network effects, algorithm driven dynamic pricing and government rules. The findings suggest that combining stochastic differential equations and game theory can help people to build better pricing models for modern monopoly markets conditions are uncertain. This method also provides some useful suggestions for regulators who hope to keep market efficiency while protecting consumer interests.

Authors

Publication Details

Journal
Theoretical and Natural Science
Published
2026-10-27
DOI
https://doi.org/10.54254/2753-8818/2026.pu38246
Primary Topic
Merger and Competition Analysis
Type
article
Field-Weighted Citation Impact
0.00
Controls
|||
ALL TIME
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
article

Application of Financial Mathematical Models in Optimal Pricing Decisions of Monopoly Firms

Yuehan Cheng
1 links
Theoretical and Natural Science
Merger and Competition Analysis
article

Application of Financial Mathematical Models in Optimal Pricing Decisions of Monopoly Firms

Yuehan Cheng
article en

Abstract

The pricing decisions of monopoly firms represent a core problem in industrial organization and financial economics, which has significant impaction for market efficiency and consumer welfare. When markets evolve from traditional industrial structures to digital ecosystems, the mathematical modeling of monopoly pricing becomes more sophisticate. Incorporating game-theoretic frameworks, stochastic processes, and optimization techniques. This paper studies how financial mathematical models can support monopoly firms in setting optimal prices. By using the method of comparative analysis, it mainly discusses Cournot competition model, Hotelling spatial competition model, and how these two models are adjusted for adapting to today's market environment. The analysis shows that classical models provide basic understandings into equilibrium pricing under different competitive situations. However, we cannot use these models directly for digital or resources focused markets. People need to change them to consider network effects, algorithm driven dynamic pricing and government rules. The findings suggest that combining stochastic differential equations and game theory can help people to build better pricing models for modern monopoly markets conditions are uncertain. This method also provides some useful suggestions for regulators who hope to keep market efficiency while protecting consumer interests.

Theoretical and Natural ScienceVol. 196(1)
Openalex Percentile: Top 8%
Merger and Competition Analysis
AI Navigator

Ask Laika to Summarize, Analyze, and Connect papers live on the map.

Summarize Papers & Methodologies

Extract key findings, datasets, and comparative methods across publications.

Benchmark Rankings & Visual Analytics

Rank top research institutions, authors, funders, topics, and journals by Field-Weighted Citation Impact (FWCI) and paper volume with instant charts.

Connect Distant Disciplines

Bridge topological clusters on the map to find hidden collaborative intersections.

Laika access coming soon
Application of Financial Mathematical Models in Optimal Pricing Decisions of Monopoly Firms — Yuehan Cheng · Theoretical and Natural Science (2026) | TGRS Research Map | TGRS