Week 14_marketing strategy_price

# Week 14_marketing strategy_price - Department of Food and...

This preview shows pages 1–9. Sign up to view the full content.

LESE204 Department of Food and Resource Economics Marketing Strategies - Pricing strategies -

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
LESE204 Department of Food and Resource Economics 1. Pricing rule Pricing rule for monopoly or monopolistic competition - MR = P[1 + E q,p ]/ E q,p . Under the profits-max condition of MR = MC - Pricing rule: P = [E q,p /(1+ E q,p )] MC P Q D AC MC MR
LESE204 Department of Food and Resource Economics 1. Pricing rule Pricing rule under Cournot Oligopoly Foc: Price elasticity of demand at individual firm level If q* i =q* j , then More firms result in less mark-up factor thus lower price i i i i FC q C q Q P ) ( ) ( 0 ) ( ) ( ) ( 0 ) ( ) ( ) ( 0 ) ( ] ) ( [ i i i i i i i i i i i i i q q C q Q Q P Q P q q C q q Q Q Q P Q P q FC q q C q q Q P q mc N E P p q ) 1 1 1 ( , 0 ) ( ) ( ) ( ) ( ) ( i i i q q C Q P Q q Q P Q Q Q P Q P Q q N i i 1 N Q q i 1 )) 1 /( ( , , p q p q NE NE mc P

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
LESE204 Department of Food and Resource Economics 1. Pricing rule Pricing rule under Cournot oligopoly <example> Number of firms = 3 -mc±=±10 - price elasticity of demand = -0.5 P* = 10x (3x(-0.5)/[3x(-0.5)+1)] = 30 Number of firms = 4 P* = 10x (4x(-0.5)/[4x(-0.5)+1)] =20 )) 1 /( ( , , p q p q NE NE mc P
LESE204 Department of Food and Resource Economics 2. Price discrimination intertemporal price discrimination : charging different prices at different points in time. D 1 MR 1 D 2 MR 2 MC Initially, the firm charges higher price to the consumers (early adopter) who have a high demand are unwilling to wait to buy. Later the price is lowered in order to capture the mass market (example: first release of the best-seller at a higher price with hard copy second release of it at a lower price with paper copy) P 1 P 2

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
LESE204 Department of Food and Resource Economics 2. Price discrimination Peak-load pricing : charging higher price during higher demand of the year (or particular time of the year or so) D 1 MR 1 D 2 MR 2 MC Charge higher price at a peak time P 1 P 2
LESE204 Department of Food and Resource Economics 2. Price discrimination Peak-load pricing : some times peak demand is higher than the capacity of the firm D 1 MR 1 D 2 MR 2 MC P 1 P 2 capacity

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
LESE204 Department of Food and Resource Economics 3. Two-Part pricing Two-part pricing : fixed fee + per unit charge. <example>
This is the end of the preview. Sign up to access the rest of the document.

## This note was uploaded on 03/25/2012 for the course MAR 3023 taught by Professor Lutz during the Fall '08 term at University of Florida.

### Page1 / 30

Week 14_marketing strategy_price - Department of Food and...

This preview shows document pages 1 - 9. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online