Содержание
- 2. A Scotsman phones a dentist to inquire about the cost for a tooth extraction : —
- 3. — "I can't guarantee their professionalism and it'll be painful. But the price could drop by
- 4. How Should a Monopoly Price? So far a monopoly has been thought of as a firm
- 5. Capturing Consumer Surplus All pricing strategies we will examine are means of capturing consumer surplus and
- 6. Capturing Consumer Surplus Quantity $/Q The firm would like to charge higher price to those consumers
- 7. Capturing Consumer Surplus Price discrimination is the practice of charging different prices to different consumers for
- 8. Price discrimination Price discrimination requires the absence of resale
- 9. Types of Price Discrimination 1st-degree: Each output unit is sold at a different price. Prices may
- 10. Types of Price Discrimination 3rd-degree: Price paid by buyers in a given group is the same
- 11. First-degree Price Discrimination Each output unit is sold at a different price. Price may differ across
- 12. First-degree Price Discrimination p(y) y $/output unit MC(y) Sell the th unit for $
- 13. First-degree Price Discrimination p(y) y $/output unit MC(y) Sell the th unit for $ Later on
- 14. First-degree Price Discrimination p(y) y $/output unit MC(y) Sell the th unit for $ Later on
- 15. First-degree Price Discrimination p(y) y $/output unit MC(y) The gains to the monopolist on these trades
- 16. First-degree Price Discrimination p(y) y $/output unit MC(y) So the sum of the gains to the
- 17. First-degree Price Discrimination p(y) y $/output unit MC(y) The monopolist gets the maximum possible gains from
- 18. Fig. 25.2
- 19. First-degree Price Discrimination First-degree price discrimination gives a monopolist all of the possible gains-to-trade, leaves the
- 20. First-Degree Price Discrimination In practice, perfect price discrimination is almost never possible Impractical to charge every
- 21. First-Degree Price Discrimination Examples of imperfect price discrimination where the seller has the ability to segregate
- 22. Second-Degree Price Discrimination In some markets, consumers purchase many units of a good over time Demand
- 23. Second-Degree Price Discrimination Quantity discounts are an example of second-degree price discrimination Ex: Buying in bulk
- 24. Second-Degree Price Discrimination $/Q Without discrimination: P = P0 and Q = Q0. With second-degree discrimination
- 25. Fig. 25.3 Second-Degree Price Discrimination Self selection
- 26. Fig. 25.3 Second-Degree Price Discrimination Self selection
- 27. Fig. 25.3 Second-Degree Price Discrimination Self selection
- 28. Fig. 25.3 Second-Degree Price Discrimination Self selection In practice, the monopolist often encourages self-selection by adjusting
- 29. Third-degree Price Discrimination Price paid by buyers in a given group is the same for all
- 30. Third-degree Price Discrimination A monopolist manipulates market price by altering the quantity of product supplied to
- 31. PRICE DISCRIMINATION Third-Degree Price Discrimination ● third-degree price discrimination Practice of dividing consumers into two or
- 32. PRICE DISCRIMINATION Third-Degree Price Discrimination Creating Consumer Groups Determining Relative Prices
- 33. PRICE DISCRIMINATION Third-Degree Price Discrimination Third-Degree Price Discrimination Figure 11.5 Consumers are divided into two groups,
- 34. Third-degree Price Discrimination MR1(y1) MR2(y2) y1 y2 y1* y2* p1(y1*) p2(y2*) MC MC p1(y1) p2(y2) Market
- 35. Third-degree Price Discrimination MR1(y1) MR2(y2) y1 y2 y1* y2* p1(y1*) p2(y2*) MC MC p1(y1) p2(y2) Market
- 36. Third-degree Price Discrimination In which market will the monopolist cause the higher price?
- 37. Third-degree Price Discrimination In which market will the monopolist cause the higher price? Recall that and
- 38. Third-degree Price Discrimination In which market will the monopolist cause the higher price? Recall that But,
- 39. Third-degree Price Discrimination So
- 40. Third-degree Price Discrimination So Therefore, if and only if
- 41. Third-degree Price Discrimination So Therefore, if and only if
- 42. Third-degree Price Discrimination So Therefore, if and only if The monopolist sets the higher price in
- 43. No Sales to Smaller Market Even if third-degree price discrimination is possible, it may not be
- 44. No Sales to Smaller Market Quantity $/Q Group one, with demand D1, is not willing to
- 45. The Economics of Coupons and Rebates Those consumers who are more price elastic will tend to
- 46. The Economics of Coupons and Rebates About 20 – 30% of consumers use coupons or rebates
- 47. Price Elasticities of Demand: Users vs. Nonusers of Coupons
- 48. Airline Fares Differences in elasticities imply that some customers will pay a higher fare than others
- 49. Elasticities of Demand for Air Travel
- 50. Airline Fares There are multiple fares for every route flown by airlines They separate the market
- 51. Other Types of Price Discrimination Intertemporal Price Discrimination Practice of separating consumers with different demand functions
- 52. Intertemporal Price Discrimination Once this market has yielded a maximum profit, firms lower the price to
- 53. Intertemporal Price Discrimination Quantity $/Q Over time, demand becomes more elastic and price is reduced to
- 54. Other Types of Price Discrimination Peak-Load Pricing Practice of charging higher prices during peak periods when
- 55. Peak-Load Pricing Objective is to increase efficiency by charging customers close to marginal cost Increased MR
- 56. Peak-Load Pricing With third-degree price discrimination, the MR for all markets was equal MR is not
- 57. Peak-Load Pricing Quantity $/Q MR=MC for each group. Group 1 has higher demand during peak times.
- 58. How to Price a Best-Selling Novel How would you arrive at the price for the initial
- 59. How to Price a Best-Selling Novel Company must divide consumers into two groups: Those willing to
- 60. How to Price a Best-Selling Novel Publishers must use estimates of past books to determine how
- 61. Two-Part Tariffs A two-part tariff is a lump-sum fee, p1, plus a price p2 for each
- 62. Two-Part Tariffs Should a monopolist prefer a two-part tariff to uniform pricing, or to any of
- 63. Two-Part Tariffs p1 + p2x Q: What is the largest that p1 can be?
- 64. Two-Part Tariffs p1 + p2x Q: What is the largest that p1 can be? A: p1
- 65. Two-Part Tariffs p(y) y $/output unit MC(y) Should the monopolist set p2 above MC?
- 66. Two-Part Tariffs p(y) y $/output unit CS Should the monopolist set p2 above MC? p1 =
- 67. Two-Part Tariffs p(y) y $/output unit CS Should the monopolist set p2 above MC? p1 =
- 68. Two-Part Tariffs p(y) y $/output unit CS Should the monopolist set p2 above MC? p1 =
- 69. Two-Part Tariffs p(y) y $/output unit Should the monopolist set p2 = MC? MC(y)
- 70. Two-Part Tariffs p(y) y $/output unit Should the monopolist set p2 = MC? p1 = CS.
- 71. Two-Part Tariffs p(y) y $/output unit Should the monopolist set p2 = MC? p1 = CS.
- 72. Two-Part Tariffs p(y) y $/output unit Should the monopolist set p2 = MC? p1 = CS.
- 73. Two-Part Tariffs p(y) y $/output unit Should the monopolist set p2 = MC? p1 = CS.
- 74. Two-Part Tariffs p(y) y $/output unit Should the monopolist set p2 = MC? p1 = CS.
- 75. Two-Part Tariffs The monopolist maximizes its profit when using a two-part tariff by setting its per
- 76. Two-Part Tariffs A profit-maximizing two-part tariff gives an efficient market outcome in which the monopolist obtains
- 77. The Two-Part Tariff Form of pricing in which consumers are charged both an entry and usage
- 78. The Two-Part Tariff Pricing decision is setting the entry fee (T) and the usage fee (P)
- 79. Usage price P* is set equal to MC. Entry price T* is equal to the entire
- 80. Two-Part Tariff with Two Consumers Two consumers, but firm can only set one entry fee and
- 81. The price, P*, will be greater than MC. Set T* at the surplus value of D2.
- 82. Two-Part Tariff with Two Consumers Firm should set usage fee above MC Set entry fee equal
- 83. The Two-Part Tariff with Many Consumers No exact way to determine P* and T* Must consider
- 84. The Two-Part Tariff with Many Consumers To find optimum combination, choose several combinations of P and
- 85. Two-Part Tariff with Many Different Consumers T Profit Total profit is the sum of the profit
- 86. The Two-Part Tariff Rule of Thumb Similar demand: Choose P close to MC and high T
- 87. The Two-Part Tariff With a Twist Entry price (T) entitles the buyer to a certain number
- 88. Polaroid Cameras In 1971, Polaroid introduced the SX-70 camera Polaroid was able to use two-part tariff
- 89. Polaroid Cameras Buying camera is like entry fee Unlike an amusement park, for example, the marginal
- 90. Polaroid Cameras Analytical framework:
- 91. Polaroid Cameras In the end, the film prices were significantly above marginal cost There was considerable
- 92. Bundling Bundling is packaging two or more products to gain a pricing advantage Conditions necessary for
- 93. Bundling When film company leased “Gone with the Wind,” it required theaters to also lease “Getting
- 94. Bundling Renting the movies separately would result in each theater paying the lowest reservation price for
- 95. Bundling If the movies are bundled: Theater A will pay $15,000 for both Theater B will
- 96. Relative Valuations More profitable to bundle because relative valuation of two films are reversed Demands are
- 97. Relative Valuations If the demands were positively correlated (Theater A would pay more for both films
- 98. Bundling If the movies are bundled: Theater A will pay $16,000 for both Theater B will
- 99. Bundling Bundling Scenario: Two different goods and many consumers Many consumers with different reservation price combinations
- 100. Reservation Prices r2 r1 For example, Consumer A is willing to pay up to $3.25 for
- 101. Consumption Decisions When Products are Sold Separately r2 r1 Consumers fall into four categories based on
- 102. Consumption Decisions When Products are Bundled r2 r1 Consumers buy the bundle when r1 + r2
- 103. Consumption Decisions When Products are Bundled The effectiveness of bundling depends upon the degree of negative
- 104. Reservation Prices If the demands are perfectly positively correlated, the firm will not gain by bundling.
- 105. Reservation Prices r2 r1 If the demands are perfectly negatively correlated, bundling is the ideal strategy
- 106. Movie Example r2 r1 Bundling pays due to negative correlation. (Wind) (Gertie) 5,000 14,000 10,000 5,000
- 107. Mixed Bundling Practice of selling two or more goods both as a package and individually This
- 108. Mixed Versus Pure Bundling For each good, marginal production cost exceeds reservation price of one consumer.
- 109. Mixed Bundling – Example Demands are perfectly negatively correlated but significant marginal costs Four customers under
- 110. Mixed Bundling – Example We can see the effects under different scenarios in the following table:
- 111. Bundling If MC is zero, mixed bundling can still be more profitable if consumer demands are
- 112. Mixed Bundling with Zero Marginal Costs A and D purchase individually. B and C purchase bundled.
- 113. Bundling in Practice Car purchasing Bundles of options such as electric locks with air conditioning Vacation
- 114. Bundling Mixed Bundling in Practice Use of market surveys to determine reservation prices Design a pricing
- 115. Mixed Bundling in Practice r2 r1 The firm can first choose a price for the bundle
- 116. A Restaurant’s Pricing Problem
- 117. Tying The practice of requiring a customer to purchase one good in order to purchase another
- 118. Tying Allows the seller to meter the customer and use a two-part tariff to discriminate against
- 119. Versioning Extreme example: damaged goods Intel 486 486SX - $333 in 1991 486DX - $588 in
- 120. Durable-goods pricing Waiting for the price cut. Non-price discrimination seems to increase profits Possible solutions: lowest
- 121. Advertising Firms with market power have to decide how much to advertise We can show how
- 122. Advertising Assumptions Firm sets only one price for product Firm knows quantity demanded depends on price
- 123. ADVERTISING Effects of Advertising Figure 11.20 AR and MR are average and marginal revenue when the
- 124. The price P and advertising expenditure A to maximize profit, is given by: The firm should
- 125. First, rewrite equation (11.3) as follows: Now multiply both sides of this equation by A/PQ, the
- 126. Advertising A Rule of Thumb for Advertising To maximize profit, the firm’s advertising-to-sales ratio should be
- 127. Advertising An Example R(Q) = $1 million/yr $10,000 budget for A (advertising--1% of revenues) EA =
- 128. Advertising The firm in our example should increase advertising A/PQ = -(2/-.4) = 5% Increase budget
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