BUSSPP 0020 Chapter Notes -Walmart, Price Drop, Movie Theater
7 May 2014
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Document Summary
Pricing in idealized economic markets: perfect competition, depends on supply, demand, attributes, and timing, assume spot transactions, price depends on supply and demand because products are homogenous, equilibrium price, oligopoly and monopoly, oligopolies sellers have some control over pricing, sellers price similarly but not identically, sellers with stronger brands= higher prices, prices relative to market share of seller largest supplier= higher price, can use price discrimination, movie theater lower prices for sr. citizens and students, prices in oligopoly are collusive, explicit collusion sellers share information and/or strike agreements to fix prices illegal in the u. s, implicit collusion signaling largest seller increases prices and other players do the same, bottom line: prices in oligopolies tend to be higher than in perfect competition resulting in opportunity to earn profit greater than 0. Sellers generally prefer it to perfect competition: monopolies considerable control over prices, constraints, high prices provide incentives for new entrants, laws limit pricing, as price increases, demand decreases.
