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Pricing Strategies for Firms with Market Power


Headline: Mickey Mouse Lets You Ride "For Free" at Disney World

I.

Introduction

II.

Basic Pricing Strategies

A.

Review of the Basic Rule of Profit Maximization

B.

A Simple Pricing Rule for Monopoly and Monopolistic Competition

C.

A Simple Pricing Rule for Cournot Oligopoly

III.

Strategies that Yield Even Greater Profits

A.

Extracting Surplus from Consumers

1.

Price Discrimination

2.

Two-Part Pricing

3.

Block Pricing

4.

Commodity Bundling

B.

Pricing Strategies for Special Cost and Demand Structures

1.

Peak-Load Pricing

2.

Cross Subsidies

3.

Transfer Pricing

C.

Pricing Strategies in Markets with Intense Price Competition

1.

Price Matching

2.

Introducing Brand Loyalty

3.

Randomized Pricing

IV.

Answering the Headline

V.

Summary

VI.

Key Terms and Concepts

VII.

Conceptual and Computational Questions

VIII.

Problems and Applications

IX.

Case-Based Exercises

X.

Selected Readings











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