Презентация Monopoly Behavior онлайн

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Слайды и текст к этой презентации:

№1 слайд
Monopoly Behavior
Содержание слайда: Monopoly Behavior
№2 слайд
A Scotsman phones a dentist
Содержание слайда: A Scotsman phones a dentist to inquire about the cost for a tooth extraction : A Scotsman phones a dentist to inquire about the cost for a tooth extraction : — "85 pounds for an extraction, sir" the dentist replied. ** "85 quid ! Huv ye no'got anythin' cheaper ?„ — "That's the normal charge,” said the dentist. ** "Whit about if ye didn’t use any anesthetic ?„ — "That's unusual, sir, but I could do it and it would knock 15 pounds off". ** "What aboot if ye used one of your dentist trainees and still without any anesthetic ?"
№3 слайд
quot I can t guarantee their
Содержание слайда: — "I can't guarantee their professionalism and it'll be painful. But the price could drop by 20 pounds.” — "I can't guarantee their professionalism and it'll be painful. But the price could drop by 20 pounds.” ** "How aboot if ye make it a trainin' session, have yer student do the extraction with the other students watchin' and learning‚?„ — "It'll be good for the students", mulled the dentist. "I'll charge you 5 pounds but it will be traumatic". ** " It's a deal,” said the Scotsman. "Can ye confirm an appointment for my wife next Tuesday then ?"
№4 слайд
How Should a Monopoly Price?
Содержание слайда: How Should a Monopoly Price? So far a monopoly has been thought of as a firm which has to sell its product at the same price to every customer. This is uniform pricing. Can price-discrimination earn a monopoly higher profits?
№5 слайд
Capturing Consumer Surplus
Содержание слайда: Capturing Consumer Surplus All pricing strategies we will examine are means of capturing consumer surplus and transferring it to the producer Profit maximizing point of P* and Q* But some consumers will pay more than P* for a good Raising price will lose some consumers, leading to smaller profits Lowering price will gain some consumers, but lower profits
№6 слайд
Capturing Consumer Surplus
Содержание слайда: Capturing Consumer Surplus
№7 слайд
Capturing Consumer Surplus
Содержание слайда: Capturing Consumer Surplus Price discrimination is the practice of charging different prices to different consumers for similar goods Must be able to identify the different consumers and get them to pay different prices Other techniques that expand the range of a firm’s market to get at more consumer surplus Tariffs and bundling
№8 слайд
Price discrimination Price
Содержание слайда: Price discrimination Price discrimination requires the absence of resale
№9 слайд
Types of Price Discrimination
Содержание слайда: Types of Price Discrimination 1st-degree: Each output unit is sold at a different price. Prices may differ across buyers. 2nd-degree: The price paid by a buyer can vary with the quantity demanded by the buyer. But all customers face the same price schedule. E.g., bulk-buying discounts.
№10 слайд
Types of Price Discrimination
Содержание слайда: Types of Price Discrimination 3rd-degree: Price paid by buyers in a given group is the same for all units purchased. But price may differ across buyer groups. E.g., senior citizen and student discounts vs. no discounts for middle-aged persons.
№11 слайд
First-degree Price
Содержание слайда: First-degree Price Discrimination Each output unit is sold at a different price. Price may differ across buyers. It requires that the monopolist can discover the buyer with the highest valuation of its product, the buyer with the next highest valuation, and so on.
№12 слайд
First-degree Price
Содержание слайда: First-degree Price Discrimination
№13 слайд
First-degree Price
Содержание слайда: First-degree Price Discrimination
№14 слайд
First-degree Price
Содержание слайда: First-degree Price Discrimination
№15 слайд
First-degree Price
Содержание слайда: First-degree Price Discrimination
№16 слайд
First-degree Price
Содержание слайда: First-degree Price Discrimination
№17 слайд
First-degree Price
Содержание слайда: First-degree Price Discrimination
№18 слайд
Fig. .
Содержание слайда: Fig. 25.2
№19 слайд
First-degree Price
Содержание слайда: First-degree Price Discrimination First-degree price discrimination gives a monopolist all of the possible gains-to-trade, leaves the buyers with zero surplus, and supplies the efficient amount of output.
№20 слайд
First-Degree Price
Содержание слайда: First-Degree Price Discrimination In practice, perfect price discrimination is almost never possible Impractical to charge every customer a different price (unless very few customers) Firms usually do not know reservation price of each customer Firms can discriminate imperfectly Can charge a few different prices based on some estimates of reservation prices
№21 слайд
First-Degree Price
Содержание слайда: First-Degree Price Discrimination Examples of imperfect price discrimination where the seller has the ability to segregate the market to some extent and charge different prices for the same product: Lawyers, doctors, accountants, priests, policemen Car salesperson (15% profit margin) Colleges and universities (differences in financial aid)
№22 слайд
Second-Degree Price
Содержание слайда: Second-Degree Price Discrimination In some markets, consumers purchase many units of a good over time Demand for that good declines with increased consumption Electricity, water, heating fuel Firms can engage in second-degree price discrimination Practice of charging different prices per unit for different quantities of the same good or service
№23 слайд
Second-Degree Price
Содержание слайда: Second-Degree Price Discrimination Quantity discounts are an example of second-degree price discrimination Ex: Buying in bulk at Sam’s Club Block pricing – the practice of charging different prices for different quantities of “blocks” of a good Ex: electric power companies charge different prices for a consumer purchasing a set block of electricity
№24 слайд
Second-Degree Price
Содержание слайда: Second-Degree Price Discrimination
№25 слайд
Fig. .
Содержание слайда: Fig. 25.3
№26 слайд
Fig. .
Содержание слайда: Fig. 25.3
№27 слайд
Fig. .
Содержание слайда: Fig. 25.3
№28 слайд
Fig. .
Содержание слайда: Fig. 25.3
№29 слайд
Third-degree Price
Содержание слайда: Third-degree Price Discrimination Price paid by buyers in a given group is the same for all units purchased. But price may differ across buyer groups.
№30 слайд
Third-degree Price
Содержание слайда: Third-degree Price Discrimination A monopolist manipulates market price by altering the quantity of product supplied to that market. So the question “What discriminatory prices will the monopolist set, one for each group?” is really the question “How many units of product will the monopolist supply to each group?”
№31 слайд
PRICE DISCRIMINATION
Содержание слайда: PRICE DISCRIMINATION
№32 слайд
PRICE DISCRIMINATION
Содержание слайда: PRICE DISCRIMINATION
№33 слайд
PRICE DISCRIMINATION
Содержание слайда: PRICE DISCRIMINATION
№34 слайд
Third-degree Price
Содержание слайда: Third-degree Price Discrimination
№35 слайд
Third-degree Price
Содержание слайда: Third-degree Price Discrimination
№36 слайд
Third-degree Price
Содержание слайда: Third-degree Price Discrimination In which market will the monopolist cause the higher price?
№37 слайд
Third-degree Price
Содержание слайда: Third-degree Price Discrimination In which market will the monopolist cause the higher price? Recall that
№38 слайд
Third-degree Price
Содержание слайда: Third-degree Price Discrimination In which market will the monopolist cause the higher price? Recall that But,
№39 слайд
Third-degree Price
Содержание слайда: Third-degree Price Discrimination
№40 слайд
Third-degree Price
Содержание слайда: Third-degree Price Discrimination
№41 слайд
Third-degree Price
Содержание слайда: Third-degree Price Discrimination
№42 слайд
Third-degree Price
Содержание слайда: Third-degree Price Discrimination
№43 слайд
No Sales to Smaller Market
Содержание слайда: No Sales to Smaller Market Even if third-degree price discrimination is possible, it may not be feasible to try to sell to both groups It is possible that the demand for one group is so low that it would not be profitable to lower price enough to sell to that group
№44 слайд
No Sales to Smaller Market
Содержание слайда: No Sales to Smaller Market
№45 слайд
The Economics of Coupons and
Содержание слайда: The Economics of Coupons and Rebates Those consumers who are more price elastic will tend to use the coupon/rebate more often when they purchase the product than those consumers with a less elastic demand Coupons and rebate programs allow firms to price discriminate
№46 слайд
The Economics of Coupons and
Содержание слайда: The Economics of Coupons and Rebates About 20 – 30% of consumers use coupons or rebates Firms can get those with higher elasticities of demand to purchase the good who would not normally buy it Table 11.1 shows how elasticities of demand vary for coupon/rebate users and non-users
№47 слайд
Price Elasticities of Demand
Содержание слайда: Price Elasticities of Demand: Users vs. Nonusers of Coupons
№48 слайд
Airline Fares Differences in
Содержание слайда: Airline Fares Differences in elasticities imply that some customers will pay a higher fare than others Business travelers have few choices and their demand is less elastic Casual travelers and families are more price-sensitive and will therefore be choosier
№49 слайд
Elasticities of Demand for
Содержание слайда: Elasticities of Demand for Air Travel
№50 слайд
Airline Fares There are
Содержание слайда: Airline Fares There are multiple fares for every route flown by airlines They separate the market by setting various restrictions on the tickets Must stay over a Saturday night 21-day advance, 14-day advance Basic restrictions – can change ticket to only certain days Most expensive: no restrictions – first class
№51 слайд
Other Types of Price
Содержание слайда: Other Types of Price Discrimination Intertemporal Price Discrimination Practice of separating consumers with different demand functions into different groups by charging different prices at different points in time Initial release of a product, the demand is inelastic Hard back vs. paperback book New release movie Technology
№52 слайд
Intertemporal Price
Содержание слайда: Intertemporal Price Discrimination Once this market has yielded a maximum profit, firms lower the price to appeal to a general market with a more elastic demand This can be seen graphically looking at two different groups of consumers – one willing to buy right now and one willing to wait
№53 слайд
Intertemporal Price
Содержание слайда: Intertemporal Price Discrimination
№54 слайд
Other Types of Price
Содержание слайда: Other Types of Price Discrimination Peak-Load Pricing Practice of charging higher prices during peak periods when capacity constraints cause marginal costs to be higher Demand for some products may peak at particular times Rush hour traffic Electricity - late summer afternoons Ski resorts on weekends
№55 слайд
Peak-Load Pricing Objective
Содержание слайда: Peak-Load Pricing Objective is to increase efficiency by charging customers close to marginal cost Increased MR and MC would indicate a higher price Total surplus is higher because charging close to MC Can measure efficiency gain from peak-load pricing
№56 слайд
Peak-Load Pricing With
Содержание слайда: Peak-Load Pricing With third-degree price discrimination, the MR for all markets was equal MR is not equal for each market because one market does not impact the other market with peak-load pricing Price and sales in each market are independent Ex: electricity, movie theaters
№57 слайд
Peak-Load Pricing
Содержание слайда: Peak-Load Pricing
№58 слайд
How to Price a Best-Selling
Содержание слайда: How to Price a Best-Selling Novel How would you arrive at the price for the initial release of the hardbound edition of a book? Hardback and paperback books are ways for the company to price discriminate How does the company determine what price to sell the hardback and paperback books for? How does the company determine when to release the paperback?
№59 слайд
How to Price a Best-Selling
Содержание слайда: How to Price a Best-Selling Novel Company must divide consumers into two groups: Those willing to buy the more expensive hardback Those willing to wait for the paperback Have to be strategic about when to release paperback after hardback Publishers typically wait 12 to 18 months
№60 слайд
How to Price a Best-Selling
Содержание слайда: How to Price a Best-Selling Novel Publishers must use estimates of past books to determine how much to sell a new book for Hard to determine the demand for a NEW book New books are typically sold for about the same price, to take this into account Demand for paperbacks is more elastic so we should expect it to be priced lower
№61 слайд
Two-Part Tariffs A two-part
Содержание слайда: Two-Part Tariffs A two-part tariff is a lump-sum fee, p1, plus a price p2 for each unit of product purchased. Thus the cost of buying x units of product is p1 + p2x.
№62 слайд
Two-Part Tariffs Should a
Содержание слайда: Two-Part Tariffs Should a monopolist prefer a two-part tariff to uniform pricing, or to any of the price-discrimination schemes discussed so far? If so, how should the monopolist design its two-part tariff?
№63 слайд
Two-Part Tariffs p p x Q What
Содержание слайда: Two-Part Tariffs p1 + p2x Q: What is the largest that p1 can be?
№64 слайд
Two-Part Tariffs p p x Q What
Содержание слайда: Two-Part Tariffs p1 + p2x Q: What is the largest that p1 can be? A: p1 is the “market entrance fee” so the largest it can be is the surplus the buyer gains from entering the market. Set p1 = CS and now ask what should be p2?
№65 слайд
Two-Part Tariffs
Содержание слайда: Two-Part Tariffs
№66 слайд
Two-Part Tariffs
Содержание слайда: Two-Part Tariffs
№67 слайд
Two-Part Tariffs
Содержание слайда: Two-Part Tariffs
№68 слайд
Two-Part Tariffs
Содержание слайда: Two-Part Tariffs
№69 слайд
Two-Part Tariffs
Содержание слайда: Two-Part Tariffs
№70 слайд
Two-Part Tariffs
Содержание слайда: Two-Part Tariffs
№71 слайд
Two-Part Tariffs
Содержание слайда: Two-Part Tariffs
№72 слайд
Two-Part Tariffs
Содержание слайда: Two-Part Tariffs
№73 слайд
Two-Part Tariffs
Содержание слайда: Two-Part Tariffs
№74 слайд
Two-Part Tariffs
Содержание слайда: Two-Part Tariffs
№75 слайд
Two-Part Tariffs The
Содержание слайда: Two-Part Tariffs The monopolist maximizes its profit when using a two-part tariff by setting its per unit price p2 at marginal cost and setting its lump-sum fee p1 equal to Consumers’ Surplus.
№76 слайд
Two-Part Tariffs A
Содержание слайда: Two-Part Tariffs A profit-maximizing two-part tariff gives an efficient market outcome in which the monopolist obtains as profit the total of all gains-to-trade.
№77 слайд
The Two-Part Tariff Form of
Содержание слайда: The Two-Part Tariff Form of pricing in which consumers are charged both an entry and usage fee Ex: amusement park, golf course, telephone service A fee is charged upfront for right to use/buy the product An additional fee is charged for each unit the consumer wishes to consume Pay a fee to play golf and then pay another fee for each game you play
№78 слайд
The Two-Part Tariff Pricing
Содержание слайда: The Two-Part Tariff Pricing decision is setting the entry fee (T) and the usage fee (P) Choosing the trade-off between free-entry and high-use prices or high-entry and zero-use prices Single Consumer Assume firm knows consumer demand Firm wants to capture as much consumer surplus as possible
№79 слайд
Two-Part Tariff with a Single
Содержание слайда: Two-Part Tariff with a Single Consumer
№80 слайд
Two-Part Tariff with Two
Содержание слайда: Two-Part Tariff with Two Consumers Two consumers, but firm can only set one entry fee and one usage fee Does it make sense to set usage fee equal to MC and entrance fee equal to CS of the consumer with the smaller demand?
№81 слайд
Two-Part Tariff with Two
Содержание слайда: Two-Part Tariff with Two Consumers
№82 слайд
Two-Part Tariff with Two
Содержание слайда: Two-Part Tariff with Two Consumers Firm should set usage fee above MC Set entry fee equal to remaining consumer surplus of consumer with smaller demand Firm needs to know demand curves
№83 слайд
The Two-Part Tariff with Many
Содержание слайда: The Two-Part Tariff with Many Consumers No exact way to determine P* and T* Must consider the trade-off between the entry fee T* and the use fee P* Low entry fee: more entrants and more profit from sales of item As entry fee becomes smaller, number of entrants is larger and profit from entry fee will fall
№84 слайд
The Two-Part Tariff with Many
Содержание слайда: The Two-Part Tariff with Many Consumers To find optimum combination, choose several combinations of P and T Find combination that maximizes profit Firm’s profit is divided into two components Each is a function of entry fee, T assuming a fixed sales price, P
№85 слайд
Two-Part Tariff with Many
Содержание слайда: Two-Part Tariff with Many Different Consumers
№86 слайд
The Two-Part Tariff Rule of
Содержание слайда: The Two-Part Tariff Rule of Thumb Similar demand: Choose P close to MC and high T Dissimilar demand: Choose high P and low T Ex: Disneyland in California and Disney world in Florida have a strategy of high entry fee and charge nothing for ride
№87 слайд
The Two-Part Tariff With a
Содержание слайда: The Two-Part Tariff With a Twist Entry price (T) entitles the buyer to a certain number of free units Gillette razors sold with several blades Amusement park admission comes with some tokens On-line fees with free time Can set higher entry fee without losing many consumers Higher entry fee captures either surplus without driving them out of the market Captures more surplus of large customers
№88 слайд
Polaroid Cameras In ,
Содержание слайда: Polaroid Cameras In 1971, Polaroid introduced the SX-70 camera Polaroid was able to use two-part tariff for pricing of camera/film Allowed them greater profits than would have been possible if camera used ordinary film Polaroid had a monopoly on cameras and film
№89 слайд
Polaroid Cameras Buying
Содержание слайда: Polaroid Cameras Buying camera is like entry fee Unlike an amusement park, for example, the marginal cost of providing an additional camera is significantly greater than zero It was necessary for Polaroid to have monopoly If ordinary film could be used, the price of film would be close to MC Polaroid needed to gain most of its profits from sale of film
№90 слайд
Polaroid Cameras Analytical
Содержание слайда: Polaroid Cameras Analytical framework:
№91 слайд
Polaroid Cameras In the end,
Содержание слайда: Polaroid Cameras In the end, the film prices were significantly above marginal cost There was considerable heterogeneity of consumer demands
№92 слайд
Bundling Bundling is
Содержание слайда: Bundling Bundling is packaging two or more products to gain a pricing advantage Conditions necessary for bundling Heterogeneous customers Price discrimination is not possible Demands must be negatively correlated
№93 слайд
Bundling When film company
Содержание слайда: Bundling When film company leased “Gone with the Wind,” it required theaters to also lease “Getting Gertie’s Garter” Why would a company do this? Company must be able to increase revenue We can see the reservation prices for each theater and movie
№94 слайд
Bundling Renting the movies
Содержание слайда: Bundling Renting the movies separately would result in each theater paying the lowest reservation price for each movie: Maximum price Wind = $10,000 Maximum price Gertie = $3,000 Total Revenue = $26,000
№95 слайд
Bundling If the movies are
Содержание слайда: Bundling If the movies are bundled: Theater A will pay $15,000 for both Theater B will pay $14,000 for both If each were charged the lower of the two prices, total revenue will be $28,000 The movie company will gain more revenue ($2000) by bundling the movie
№96 слайд
Relative Valuations More
Содержание слайда: Relative Valuations More profitable to bundle because relative valuation of two films are reversed Demands are negatively correlated A pays more for Wind ($12,000) than B ($10,000) B pays more for Gertie ($4,000) than A ($3,000)
№97 слайд
Relative Valuations If the
Содержание слайда: Relative Valuations If the demands were positively correlated (Theater A would pay more for both films as shown) bundling would not result in an increase in revenue
№98 слайд
Bundling If the movies are
Содержание слайда: Bundling If the movies are bundled: Theater A will pay $16,000 for both Theater B will pay $13,000 for both If each were charged the lower of the two prices, total revenue will be $26,000, the same as by selling the films separately
№99 слайд
Bundling Bundling Scenario
Содержание слайда: Bundling Bundling Scenario: Two different goods and many consumers Many consumers with different reservation price combinations for two goods Can show graphically the preferences of consumers in terms of reservation prices and consumption decisions given prices charged r1 is reservation price of consumer for good 1 r2 is reservation price of consumer for good 2
№100 слайд
Reservation Prices
Содержание слайда: Reservation Prices
№101 слайд
Consumption Decisions When
Содержание слайда: Consumption Decisions When Products are Sold Separately
№102 слайд
Consumption Decisions When
Содержание слайда: Consumption Decisions When Products are Bundled
№103 слайд
Consumption Decisions When
Содержание слайда: Consumption Decisions When Products are Bundled The effectiveness of bundling depends upon the degree of negative correlation between the two demands Best when consumers who have high reservation price for Good 1 have a low reservation price for Good 2 and vice versa Can see graphically looking at positively and negatively correlated prices
№104 слайд
Reservation Prices
Содержание слайда: Reservation Prices
№105 слайд
Reservation Prices
Содержание слайда: Reservation Prices
№106 слайд
Movie Example
Содержание слайда: Movie Example
№107 слайд
Mixed Bundling Practice of
Содержание слайда: Mixed Bundling Practice of selling two or more goods both as a package and individually This differs from pure bundling when products are sold only as a package Mixed bundling is good strategy when Demands are somewhat negatively correlated Marginal production costs are significant
№108 слайд
Mixed Versus Pure Bundling
Содержание слайда: Mixed Versus Pure Bundling
№109 слайд
Mixed Bundling Example
Содержание слайда: Mixed Bundling – Example Demands are perfectly negatively correlated but significant marginal costs Four customers under three different strategies Selling good separately, P1 = $50, P2 = $90 Selling goods only as a bundle, PB = $100 Mixed bundling: Sold individually with P1 = P2 = $89.95 Sold as a bundle with PB = $100
№110 слайд
Mixed Bundling Example We can
Содержание слайда: Mixed Bundling – Example We can see the effects under different scenarios in the following table:
№111 слайд
Bundling If MC is zero, mixed
Содержание слайда: Bundling If MC is zero, mixed bundling can still be more profitable if consumer demands are not perfectly negatively correlated Example: Reservation prices for consumers B and C are higher Compare the same three strategies Mixed bundling is the more profitable option since everyone will end up buying
№112 слайд
Mixed Bundling with Zero
Содержание слайда: Mixed Bundling with Zero Marginal Costs
№113 слайд
Bundling in Practice Car
Содержание слайда: Bundling in Practice Car purchasing Bundles of options such as electric locks with air conditioning Vacation Travel Bundling hotel with air fare Cable television Premium channels bundled together
№114 слайд
Bundling Mixed Bundling in
Содержание слайда: Bundling Mixed Bundling in Practice Use of market surveys to determine reservation prices Design a pricing strategy from the survey results Can show graphically using information collected from consumers Consumers are separated into four regions Can change prices to find max profits
№115 слайд
Mixed Bundling in Practice
Содержание слайда: Mixed Bundling in Practice
№116 слайд
A Restaurant s Pricing Problem
Содержание слайда: A Restaurant’s Pricing Problem
№117 слайд
Tying The practice of
Содержание слайда: Tying The practice of requiring a customer to purchase one good in order to purchase another Xerox machines and the paper IBM mainframe and computer cards Allows firm to meter demand and practice price discrimination more effectively
№118 слайд
Tying Allows the seller to
Содержание слайда: Tying Allows the seller to meter the customer and use a two-part tariff to discriminate against the heavy user McDonald’s Allows them to protect their brand name Microsoft Uses to extend market power
№119 слайд
Versioning Extreme example
Содержание слайда: Versioning Extreme example: damaged goods Intel 486 486SX - $333 in 1991 486DX - $588 in 1991 IBM LaserPrinter E (5 pages per minute) LaserPrinter (10 pages per minute)
№120 слайд
Durable-goods pricing Waiting
Содержание слайда: Durable-goods pricing Waiting for the price cut. Non-price discrimination seems to increase profits Possible solutions: lowest price guarantee leasing instead of selling
№121 слайд
Advertising Firms with market
Содержание слайда: Advertising Firms with market power have to decide how much to advertise We can show how firms choose profit maximizing advertising Decision depends on characteristics of demand for firm’s product
№122 слайд
Advertising Assumptions Firm
Содержание слайда: Advertising Assumptions Firm sets only one price for product Firm knows quantity demanded depends on price and advertising expenditure dollars, A Q(P,A) We can show the firm’s cost curves, revenue curves, and profits under advertising and no advertising
№123 слайд
ADVERTISING
Содержание слайда: ADVERTISING
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Содержание слайда:
№125 слайд
Содержание слайда:
№126 слайд
Advertising A Rule of Thumb
Содержание слайда: Advertising A Rule of Thumb for Advertising To maximize profit, the firm’s advertising-to-sales ratio should be equal to minus the ratio of the advertising and price elasticities of demand
№127 слайд
Advertising An Example R Q
Содержание слайда: Advertising An Example R(Q) = $1 million/yr $10,000 budget for A (advertising--1% of revenues) EA = .2 (increase budget $20,000, sales increase by 20%) EP = -4 (markup price over MC is substantial)
№128 слайд
Advertising The firm in our
Содержание слайда: Advertising The firm in our example should increase advertising A/PQ = -(2/-.4) = 5% Increase budget to $50,000
№129 слайд
Advertising In Practice
Содержание слайда: Advertising – In Practice Estimate the level of advertising for each of the firms Supermarkets EP = -10; EA = 0.1 to 0.3 Convenience stores EP = -5; EA very small Designer jeans EP = -3 to –4; EA = 0.3 to 1 Laundry detergents EP = -3 to –4; EA very large
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