S07-monopoly - ECON 201 1 / 51 Pricing Perloff chaps 11...

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Unformatted text preview: ECON 201 1 / 51 Pricing Perloff chaps 11 & 12 Preliminaries Preliminaries Perloff chaps 11 & 12 But we wont cover Common price monopoly Pricing by customer group Pricing according to individual characteristics Self-selection Conclusions Postscript ECON 201 2 / 51 Perloff chaps 11 & 12 Preliminaries Perloff chaps 11 & 12 But we wont cover Common price monopoly Pricing by customer group Pricing according to individual characteristics Self-selection Conclusions Postscript ECON 201 3 / 51 We will cover: 1. single price monopoly, and 2. price discrimination based on separate groups of consumers ( 12.4) individuals characteristics ( 12.2, 12.5) self-selection and the distribution of consumers characteristics ( 12.6) But we wont cover Preliminaries Perloff chaps 11 & 12 But we wont cover Common price monopoly Pricing by customer group Pricing according to individual characteristics Self-selection Conclusions Postscript ECON 201 4 / 51 elasticity, 11.2 welfare effects, 11.3 tax incidence, 11.4 sources of monopoly 11.5-7 intertemporal decisions, 11.8 advertising, 12.7 Common price monopoly Preliminaries Common price monopoly Profit maximisation Profit maximisation Fig 11.3 Linear demand curves, p365 Example Pricing by customer group Pricing according to individual characteristics Self-selection Conclusions Postscript ECON 201 5 / 51 Profit maximisation Preliminaries Common price monopoly Profit maximisation Profit maximisation Fig 11.3 Linear demand curves, p365 Example Pricing by customer group Pricing according to individual characteristics Self-selection Conclusions Postscript ECON 201 6 / 51 A monopolist chooses a point on its demand curve, which can be expressed in a direct form, Q = Q ( p ) or indirect form, p = p ( Q ) Thus she chooses a quantity to sell, Q , max Q p ( Q ) Q- c ( Q ) or equivalently a price to charge. max p pQ ( p )- c ( Q ( p )) Profit maximisation Preliminaries Common price monopoly Profit maximisation Profit maximisation Fig 11.3 Linear demand curves, p365 Example Pricing by customer group Pricing according to individual characteristics Self-selection Conclusions Postscript ECON 201 7 / 51 max Q R + ( Q ) = R ( Q )- C ( Q ) where R ( Q ) = p ( Q ) Q The first-order condition, Profit maximisation Preliminaries Common price monopoly Profit maximisation Profit maximisation Fig 11.3 Linear demand curves, p365 Example Pricing by customer group Pricing according to individual characteristics Self-selection Conclusions Postscript ECON 201 7 / 51 max Q R + ( Q ) = R ( Q )- C ( Q ) where R ( Q ) = p ( Q ) Q The first-order condition, R ( Q )- C ( Q ) = 0 , Profit maximisation Preliminaries Common price monopoly Profit maximisation Profit maximisation Fig 11.3 Linear demand curves, p365 Example Pricing by customer group Pricing according to individual characteristics Self-selection Conclusions Postscript...
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S07-monopoly - ECON 201 1 / 51 Pricing Perloff chaps 11...

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