《管理經(jīng)濟(jì)學(xué)》研究生課件IPPTChap011

1、Chapter 11Pricing Strategies for Firms with Market PowerMcGraw-Hill/IrwinCopyright 2014 by The McGraw-Hill Companies, Inc. All rights reserved.Chapter OutlineBasic pricing strategiesReview of the basic rule of profit maximizationA simple pricing rule for monopoly and monopolistic competitionA simple

2、 pricing rule for Cournot oligopolyStrategies that yield even greater profitsExacting surplus from consumersPricing strategies for special cost and demand structuresPricing strategies in markets with intense price competition11-2Chapter OverviewIntroductionIn Chapter 10 a general set of tools was de

3、veloped to examine situations where economic agents decisions impacted rivals payoffs. The concept of a dominant strategies, Nash equilibria and subgame perfect equilibria were explored.In this chapter, we focus on pricing strategies in environments where firms have some market power. Many of these

4、strategies permit firms to earn profits that are greater than those of a single-price monopolist.Price discriminationTwo-part pricingBlock pricingCommodity bundlingPeak-load pricing11-3Chapter OverviewReview of Basic Profit Maximization11-4Basic Pricing StrategiesBasic Profit Maximization In Action1

5、1-5Basic Pricing StrategiesSimple Pricing Rule: Monopoly and Monopolistic Competition11-6Basic Pricing StrategiesSimple Pricing Rule In Action: Problem11-7Basic Pricing StrategiesSimple Pricing Rule In Action: Answer11-8Basic Pricing StrategiesSimple Pricing Rule: Cournot Oligopoly11-9Basic Pricing

6、StrategiesBeyond the Single-Price-Per-Unit ModelIn some markets, managers can enhance profits beyond those resulting from charging all consumers a single, per-unit price.Models that yield greater profits fall into three categories:Pricing strategies:that extract surplus from consumers.for special co

7、st and demand structures.in markets with intense price competition.11-10Strategies that Yield Even Greater ProfitsModels that Extract Surplus from ConsumersThis section covers the following models of surplus extraction:Price discrimination (first, second and third degrees)Two-part pricingBlock prici

8、ngCommodity bundlingEach strategy is appropriate for firms with various cost structures and degrees of market interdependence.11-11Strategies that Yield Even Greater ProfitsSurplus Extraction: First-Degree Price DiscriminationPrice discrimination is the practice of charging different prices to consu

9、mers for the same good or service.First-degree price discrimination is the practice of charging each consumer the maximum price he or she would be willing to pay for each unit of the good purchased.Implication: the firm extracts all surplus from consumers and earns the highest possible profit.Proble

10、m: managers rarely know each consumers maximum willingness to pay for each unit of the product.11-12Strategies that Yield Even Greater ProfitsSurplus Extraction: First-Degree Price Discrimination In Action11-13Strategies that Yield Even Greater ProfitsPriceQuantityDemandMCFirm profit under first-deg

11、ree price discriminationSurplus Extraction: Second-Degree Price DiscriminationSecond-degree price discrimination is the practice of posting a discrete schedule of declining prices for different ranges of quantity.Implication: firm extracts some surplus from consumers without needing to know the iden

12、tity of various consumers demand.11-14Strategies that Yield Even Greater ProfitsSurplus Extraction: Second-Degree Price Discrimination In Action11-15Strategies that Yield Even Greater ProfitsPriceQuantityDemandMCContribution to profits under second-degree price discriminationSurplus Extraction: Thir

13、d-Degree Price Discrimination11-16Strategies that Yield Even Greater ProfitsSurplus Extraction: Third-Degree Price Discrimination Rule11-17Strategies that Yield Even Greater ProfitsSurplus Extraction: Third-DegreePrice Discrimination Rule In Action: Problem11-18Strategies that Yield Even Greater Pro

14、fitsSurplus Extraction: Third-Degree Price Discrimination Rule In Action: Answer11-19Strategies that Yield Even Greater ProfitsSurplus Extraction: Two-Part PricingTwo-part pricing is a pricing strategy whereby a firm with market power charges a fixed fee for the right to purchase its goods, plus a p

15、er-unit charge for each unit purchased.11-20Strategies that Yield Even Greater ProfitsSurplus Extraction: Two-Part Pricing In Action11-21Strategies that Yield Even Greater ProfitsPriceQuantityDemandMC = ACFixed fee = $32 = profits Consumer surplus = $0Per-unit fee = $2Surplus Extraction: Block Prici

16、ngBlock pricing is a pricing strategy in which identical products are packaged together in order to enhance profits by forcing customers to make an all-or-none decision to purchase.The profit-maximizing price on a package is the total value the consumer receives for the package.11-22Strategies that

17、Yield Even Greater ProfitsSurplus Extraction: Block Pricing In Action11-23Strategies that Yield Even Greater ProfitsPriceQuantityDemandMC = ACProfit with block pricing = $32Price charged for a block of 8 units = $48Surplus Extraction: Commodity BundlingCommodity bundling is the practice of bundling

18、several different products together and selling them at a single “bundle price.”Key assumption: Consumers differ with respect to the amounts they are willing to pay for multiple products sold by a firm. Managers cannot observe different consumers valuations.11-24Strategies that Yield Even Greater Pr

19、ofitsSurplus Extraction: Commodity Bundling In Action11-25Strategies that Yield Even Greater ProfitsConsumerValuation of ComputerValuation of Monitor1$2,000$2002$1,500$300Special Demand and Costs: Peak-Load PricingPeak-load pricing is a pricing strategy in which higher prices are charged during peak

20、 hours than during off-peak hours.11-26Strategies that Yield Even Greater ProfitsSpecial Demand and Costs: Peak-Load Pricing In Action11-27Strategies that Yield Even Greater ProfitsPriceQuantityDemand HighMCMR HighDemand LowMR LowSpecial Demand and Costs: Cross-SubsidiesCross-subsidy is a pricing st

21、rategy in which profits gained from the sale of one product are used to subsidize sales of a related product.Principle:Whenever the demands for two products produced by a firm are interrelated through costs or demand, the firm may enhance profits by cross-subsidization: selling one product at or bel

22、ow cost and the other product above cost.11-28Strategies that Yield Even Greater ProfitsSpecial Demand and Costs: Transfer PricingTransfer pricing is a pricing strategy in which a firm optimally sets the internal price at which an upstream division sells an input to a downstream division.Important s

23、ince most division managers are provided an incentive to maximize their own divisions profits.Transfer pricing aligns division managers incentives with that of the overall firm, and increases overall firms profit.11-29Strategies that Yield Even Greater ProfitsSpecial Demand and Costs: Double Margina

24、lization11-30Strategies that Yield Even Greater ProfitsSpecial Demand and Costs: Transfer Pricing Rule11-31Strategies that Yield Even Greater ProfitsIntense Price Competition: Price MatchingPrice matching is a strategy in which a firm advertises a price and a promise to match any lower price offered

25、 by a competitor.Used to mitigate the stark outcome associated with firms competing in a homogeneous-product, Bertrand oligopoly.Outcome: If all firms in the market adopt a price matching policy, all firms can set the monopoly price and earn monopoly profits; instead of the zero profits it would ear

26、n in the usual one-shot Bertrand oligopoly.Potential issues:Dealing with false consumer claims of low prices.Competitors with lower cost structures.11-32Strategies that Yield Even Greater ProfitsIntense Price Competition: Inducing Brand LoyaltyBrand loyal customers continue to buy a firms product even if another firm offers a (slightly) better price.Strategy used to mitigate the tension of Bertrand competition.Methods for inducing brand loyalty.Advertising campaigns.“Frequent-buyer” programs.11-33Strategies that Yield Even Greater ProfitsIntense