manecgoodstuff

manecgoodstuff - Consumer transaction costs Searching for a...

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18:43 To increase bottom line you can lower your fixed costs, variable costs, etc. Transaction costs producer costs Consumer transaction costs. These are all ways to increase margins. D(g) f(I,S,C,P) Manipulate these variables to increase demand. Income, substitutes, compliments, price Finance (this effects I) You can reduce power of substitutes (branding), C increase # of compliments Value creation – raw materials are here, but we must create value in the system. Reduce transaction costs Effective supply given transaction costs Value capturing
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IF I produce at Q* and my cost goes up, my marginal costs will shift left/up this  will cause me to produce less.  If it costs more to produce something then you will  be more careful about producing a larger quantity consumer transaction costs shifts the demand curve. Detergent should be sold in stackable boxes.  Oh wait, it is.  
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Unformatted text preview: Consumer transaction costs Searching for a product Learning product characteristics and quality-snapfish negotiating terms of sale enforcing agreements ebay user ratings reaction curve 18:43 price of printers in our compliment example we will have 2 reaction curves price of computer Pp=6-.5Pc If Pc= 6 then Pp=3 If Pc= 4.5 then Pp=3.75 reaction curve 18:43 at the intersect, the printing company cant make any more money by changing the price. This is non cooperative. They observe the prices and set it off based. Pg 220 Printers and computers Q= 12- (Pc + Pp) 12 or less Solve for a reaction curve Pc Pc+Pp= 12-q Mr=mc solve for profit max Q If MC=0 reaction curve 18:43 Q=12-Pp-2q These are compliments. If you lower the price for computers then people have more money to spend on printers. 18:43...
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This note was uploaded on 04/08/2011 for the course MANEC 300 taught by Professor Crawford,r during the Spring '08 term at BYU.

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manecgoodstuff - Consumer transaction costs Searching for a...

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