Management and Organizational Studies 2275A/B Lecture 2: 2.A - Sophisticated Pricing.doc

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 2275A/B
• Professor: Philip King

Document Summary

Pricing is an important decision to any firm. Positing a single price for any unit amount of uniform or linear pricing. Price discrimination: for any pricing strategy in which different buyers pay different prices for the same product or service. The firm must be able to prevent arbitrage (profitable resale) It must not be profitable for another firm to lure the high-price-payers away. Text says: firm must be able to identify customers with different demands, or i. Firm has market power if the demand for its products is downwards sloping. Consumer response determines "degree of market power" o. Economists" measure of consumer responsiveness: the own-price elasticity of demand. Even negatively sloped demand for your product will get you some sales (for the firms product) Concept: what does a 1% change in price do to the demand. Perfect price discrimination: sell every unit to every buyer at the maximum price that.