Pricing Strategies 11

Pricing Strategies 11 - Pricing Strategies ManEc387...

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Pricing Strategies Man Ec 387 Fall 2011 Mark H. Hansen, PhD Strategy Group Organizational Leadership & Strategy
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Man Ec 387 2 The Structure of Industries Competitive Rivalry Threat of new Entrants Bargaining Power of Customers Threat of Substitutes Bargaining Power of Suppliers From M. Porter, 1979, “How Competitive Forces Shape Strategy”
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3 Man Ec 387 Setting Prices in Perfect Competition Firm Qf $ Df Market QM D S Pe $ Charge the market price! No preference for your product – price taker
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Man Ec 387 4 Setting Prices:  Market Power QM D $ Elastic Inelastic Unitary Denominator is Optimal Markup Factor If you knew elasticity and MC,  but not MR, you could still set price P = E F 1 + E F MC
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Man Ec 387 5 Setting Prices:  Market Power Cournot Oligopoly QM D Elastic Unitary N = number of firms EM = market elasticity EF = monopolist’s elasticity Inelastic P = NE M 1 + NE M MC E F = NE M
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Man Ec 387 6 Price Discrimination An effort to extract consumer surplus from buyers
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This note was uploaded on 11/22/2011 for the course BOM 201 taught by Professor Stuff during the Fall '11 term at BYU.

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Pricing Strategies 11 - Pricing Strategies ManEc387...

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