第有市场势力的定价.pptx

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1、Slide 1Topics to be DiscussedThe Two-Part TariffBundlingAdvertising第1页/共112页Slide 2IntroductionPricing without market power(perfect competition)is determined by market supply and demand.The individual producer must be able to forecast the market and then concentrate on managing production(cost)to ma

2、ximize profits.第2页/共112页Slide 3IntroductionPricing with market power(imperfect competition)requires the individual producer to know much more about the characteristics of demand as well as manage production.第3页/共112页Slide 4Capturing Consumer SurplusQuantity$/QDMRPmaxMCIf price is raised above P*,the

3、 firm will lose sales and reduce profit.PCPC is the pricethat would exist ina perfectly competitivemarket.AP*Q*P1Between 0 and Q*,consumerswill pay more than P*-consumer surplus(A).BP2Beyond Q*,price willhave to fall to create a consumer surplus(B).第4页/共112页Slide 5Capturing Consumer SurplusP*Q*:sing

4、le P&Q MC=MRA:consumer surplus with P*B:PMC&consumer would buy at a lower priceP1:less sales and profitsP2:increase sales&and reduce revenue and profitsPC:competitive priceQuantity$/QDMRPmaxMCPCAP*Q*P1BP2第5页/共112页Slide 6Capturing Consumer SurplusQuantity$/QDMRPmaxMCPCAP*Q*P1BP2QuestionHow can the fi

5、rmcapture the consumer surplusin A and sell profitably in B?AnswerPrice discriminationTwo-part tariffsBundling第6页/共112页Slide 7Capturing Consumer SurplusPrice discrimination is the charging of different prices to different consumers for similar goods.第7页/共112页Slide 8Price DiscriminationFirst Degree P

6、rice DiscriminationCharge a separate price to each customer:the maximum or reservation price they are willing to pay.第8页/共112页Slide 9P*Q*Without price discrimination,output is Q*and price is P*.Variable profit is the area between the MC&MR(yellow).Additional Profit From Perfect First-Degree Price Di

7、scriminationQuantity$/QPmaxWith perfect discrimination,eachconsumer pays the maximumprice they are willing to pay.Consumer surplus is the area above P*and between0 and Q*output.D=ARMRMCOutput expands to Q*and pricefalls to PC where MC=MR=AR=D.Profits increase by the area above MCbetween old MR and D

8、 to outputQ*(purple)Q*PC第9页/共112页Slide 10P*Q*Consumer surplus when a single price P*is charged.Variable profit when a single price P*is charged.Additional profit fromperfect price discriminationQuantity$/QPmaxD=ARMRMCQ*PCWith perfect discrimination Each customer pays their reservation priceProfits i

9、ncreaseAdditional Profit From Perfect First-Degree Price Discrimination第10页/共112页Slide 11QuestionWhy would a producer have difficulty in achieving first-degree price discrimination?Answer1)Too many customers(impractical)2)Could not estimate the reservation price for each customerAdditional Profit Fr

10、om Perfect First-Degree Price Discrimination第11页/共112页Slide 12Price DiscriminationFirst Degree Price DiscriminationThe model does demonstrate the potential profit(incentive)of practicing price discrimination to some degree.第12页/共112页Slide 13Price DiscriminationFirst Degree Price DiscriminationExampl

11、es 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,accountantsCar salesperson(15%profit margin)Colleges and universities第13页/共112页Slide 14First-Degree PriceDiscrimination in Pra

12、cticeQuantityDMRMC$/QP2P3P*4P5P6P1Six prices exist resultingin higher profits.With a single priceP*4,there are few consumers andthose who pay P5 or P6 may have a surplus.Q第14页/共112页Second-Degree Price DiscriminationQuantity$/QDMRMCACP0Q0Without discrimination:P=P0 and Q=Q0.With second-degreediscrimi

13、nation there are threeprices P1,P2,and P3.(e.g.electric utilities)P1Q11st BlockP2Q2P3Q32nd Block 3rd BlockSecond-degree pricediscrimination is pricingaccording to quantityconsumed-or in blocks.第15页/共112页Second-Degree Price DiscriminationQuantity$/QDMRMCACP0Q0P1Q11st BlockP2Q2P3Q32nd Block 3rd BlockE

14、conomies of scale permit:Increase consumer welfareHigher profits第16页/共112页Slide 17Price DiscriminationThird Degree Price Discrimination1)Divides the market into two-groups.2)Each group has its own demand function.第17页/共112页Slide 18Price DiscriminationThird Degree Price Discrimination3)Most common ty

15、pe of pricediscrimination.Examples:airlines,liquor,vegetables,discounts to students and senior citizens.第18页/共112页Slide 19Price DiscriminationThird Degree Price Discrimination4)Third-degree price discrimination is feasible when the seller can separate his/her market into groups who have different pr

16、ice elasticities of demand(e.g.business air travelers versus vacation air travelers)第19页/共112页Slide 20Price DiscriminationThird Degree Price DiscriminationObjectivesMR1=MR2MC1=MR1 and MC2=MR2MR1=MR2=MC第20页/共112页Slide 21Price DiscriminationThird Degree Price DiscriminationP1:price first groupP2:price

17、 second groupC(Qr)=total cost of QT=Q1+Q2Profit()=P1Q1+P2Q2-C(Qr)第21页/共112页Slide 22Price DiscriminationThird Degree Price DiscriminationSet incremental for sales to group 1=0 第22页/共112页Slide 23Price DiscriminationThird Degree Price DiscriminationSecond group of customers:MR2=MCMR1=MR2=MC 第23页/共112页S

18、lide 24Price DiscriminationThird Degree Price DiscriminationDetermining relative prices 第24页/共112页Slide 25Price DiscriminationThird Degree Price DiscriminationDetermining relative prices Pricing:Charge higher price to group with a low demand elasticity 第25页/共112页Slide 26Price DiscriminationThird Deg

19、ree Price DiscriminationExample:E1=-2&E2=-4 P1 should be 1.5 times as high as P2第26页/共112页Slide 27Third-Degree Price DiscriminationQuantityD2=AR2MR2$/QD1=AR1MR1Consumers are divided intotwo groups,with separatedemand curves for each group.MRTMRT=MR1+MR2第27页/共112页Slide 28Third-Degree Price Discrimina

20、tionQuantityD2=AR2MR2$/QD1=AR1MR1MRTMCQ2P2QTQT:MC=MRTGroup 1:P1Q1;more elasticGroup 2:P2Q2;more inelasticMR1=MR2=MCQT control MCQ1P1MC=MR1 at Q1 and P1第28页/共112页Slide 29No Sales to Smaller MarketEven if third-degree pricediscrimination is feasible,it doesntalways pay to sell to both groupsof consume

21、rs if marginal cost is rising.第29页/共112页Slide 30No Sales to Smaller MarketQuantityD2MR2$/QMCD1MR1Q*P*Group one,with demand D1,are not willing to pay enoughfor the good tomake pricediscrimination profitable.第30页/共112页Slide 31The Economics of Coupons and RebatesThose consumers who are more price elast

22、ic 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.Price Discrimination第31页/共112页Slide 32Price Elasticities of Demand for Users Versus Nonusers of CouponsToilet

23、tissue-0.60-0.66Stuffing/dressing-0.71-0.96Shampoo-0.84-1.04Cooking/salad oil-1.22-1.32Dry mix dinner-0.88-1.09Cake mix-0.21-0.43Price ElasticityProductNonusersUsers第32页/共112页Slide 33Cat food-0.49-1.13Frozen entre-0.60-0.95Gelatin-0.97-1.25Spaghetti sauce-1.65-1.81Crme rinse/conditioner-0.82-1.12Sou

24、p-1.05-1.22Hot dogs-0.59-0.77Price ElasticityProductNonusersUsersPrice Elasticities of Demand for Users Versus Nonusers of Coupons第33页/共112页Slide 34The Economics of Coupons and RebatesCake MixNonusers of coupons:PE=-0.21Users:PE=-0.43第34页/共112页Slide 35The Economics of Coupons and RebatesCake Mix Bra

25、nd(Pillsbury)PE:8 to 10 times cake mix PEExamplePE Users:-4PE Nonusers:-2第35页/共112页Slide 36The Economics of Coupons and RebatesUsing:Price of nonusers should be 1.5 times usersOr,if cake mix sells for$1.50,coupons should be 50 cents 第36页/共112页Slide 37Airline FaresDifferences in elasticities imply th

26、at some customers will pay a higher fare than others.Business travelers have few choices and their demand is less elastic.Casual travelers have choices and are more price sensitive.第37页/共112页Slide 38Elasticities of Demand for Air Travel Price-0.3-0.4-0.9 Income1.21.21.8Fare CategoryElasticityFirst-C

27、lassUnrestricted CoachDiscount第38页/共112页Slide 39Airline FaresThe airlines separate the market by setting various restrictions on the tickets.Less expensive:notice,stay over the weekend,no refundMost expensive:no restrictions第39页/共112页Slide 40Intertemporal PriceDiscrimination and Peak-Load PricingSep

28、arating the Market With TimeInitial release of a product,the demand is inelasticBookMovieComputer第40页/共112页Slide 41Separating the Market With TimeOnce this market has yielded a maximum profit,firms lower the price to appeal to a general market with a more elastic demand Paper back booksDollar Movies

29、Discount computersIntertemporal PriceDiscrimination and Peak-Load Pricing第41页/共112页Slide 42Intertemporal Price DiscriminationQuantityAC=MC$/QOver time,demand becomesmore elastic and price is reduced to appeal to the mass market.Q2MR2D2=AR2P2D1=AR1MR1P1Q1Consumers are dividedinto groups over time.Ini

30、tially,demand is lesselastic resulting in a price of P1.第42页/共112页Slide 43Demand for some products may peak at particular times.Rush hour trafficElectricity-late summer afternoonsSki resorts on weekendsIntertemporal PriceDiscrimination and Peak-Load PricingPeak-Load Pricing第43页/共112页Slide 44Capacity

31、 restraints will also increase MC.Increased MR and MC would indicate a higher price.Peak-Load PricingIntertemporal PriceDiscrimination and Peak-Load Pricing第44页/共112页Slide 45MR is not equal for each market because one market does not impact the other market.Peak-Load PricingIntertemporal PriceDiscri

32、mination and Peak-Load Pricing第45页/共112页Slide 46MR1D1=AR1MCP1Q1Peak-load price=P1.Peak-Load PricingQuantity$/QMR2D2=AR2Off-load price=P2.Q2P2第46页/共112页Slide 47How to Price a Best Selling NovelWhat Do You Think?1)How would you arrive at the price for the initial release of the hardbound edition of a

33、book?第47页/共112页Slide 48How to Price a Best Selling NovelWhat Do You Think?2)How long do you wait to release the paperback edition?Could the popularity of the book impact your decision?第48页/共112页Slide 49What Do You Think?3)How do you determine the price for the paperback edition?How to Price a Best S

34、elling Novel第49页/共112页Slide 50The Two-Part TariffThe purchase of some products and services can be separated into two decisions,and therefore,two prices.第50页/共112页Slide 51The Two-Part TariffExamples1)Amusement ParkPay to enterPay for rides and food within the park2)Tennis ClubPay to joinPay to play第

35、51页/共112页Slide 52The Two-Part TariffExamples3)Rental of Mainframe ComputersFlat FeeProcessing Time4)Safety RazorPay for razorPay for blades第52页/共112页Slide 53The Two-Part TariffExamples5)Polaroid FilmPay for the cameraPay for the film第53页/共112页Slide 54The Two-Part TariffPricing decision is setting th

36、e 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.第54页/共112页Slide 55Usage price P*is set whereMC=D.Entry price T*is equal to the entire consumer surplus.T*Two-Part Tariff with a Single ConsumerQuantity$/QMCP*D第55页/共112页

37、Slide 56D2=consumer 2D1=consumer 1Q1Q2The price,P*,will be greater than MC.Set T*at the surplus value of D2.T*Two-Part Tariff with Two ConsumersQuantity$/QMCABC第56页/共112页Slide 57The Two-Part TariffThe Two-Part Tariff With Many Different ConsumersNo exact way to determine P*and T*.Must consider the t

38、rade-off between the entry fee T*and the use fee P*.Low entry fee:High sales and falling profit with lower price and more entrants.第57页/共112页Slide 58The Two-Part TariffThe Two-Part Tariff With Many Different ConsumersTo find optimum combination,choose several combinations of P,T.Choose the combinati

39、on that maximizes profit.第58页/共112页Slide 59Two-Part Tariff withMany Different ConsumersTProfit:entry fee:salesT*Total profit is the sum of the profit from the entry fee andthe profit from sales.Both depend on T.第59页/共112页Slide 60The Two-Part TariffRule of ThumbSimilar demand:Choose P close to MC and

40、 high TDissimilar demand:Choose high P and low T.第60页/共112页Slide 61The Two-Part TariffTwo-Part Tariff With A TwistEntry price(T)entitles the buyer to a certain number of free unitsGillette razors with several bladesAmusement parks with some tokensOn-line with free time第61页/共112页Slide 62Polaroid Came

41、ras1971 Polaroid introduced the SX-70 cameraWhat Do You Think?How would you price the camera and film?第62页/共112页Slide 63Polaroid CamerasHint第63页/共112页Slide 64Pricing Cellular Phone ServiceQuestionWhy do cellular phone providers offer several different plans instead of a single two-part tariff with a

42、n access fee and per-unit charge?第64页/共112页Slide 65BundlingBundling is packaging two or more products to gain a pricing advantage.Conditions necessary for bundlingHeterogeneous customersPrice discrimination is not possibleDemands must be negatively correlated第65页/共112页Slide 66BundlingAn example:Leas

43、ing“Gone with the Wind”&“Getting Gerties Garter.”The reservation prices for each theater and movie are:Gone with the Wind Getting Gerties GarterTheater A$12,000$3,000Theater B$10,000$4,000第66页/共112页Slide 67BundlingRenting the movies separately would result in each theater paying the lowest reservati

44、on price for each movie:Maximum price Wind=$10,000Maximum price Gertie=$3,000Total Revenue=$26,000第67页/共112页Slide 68BundlingIf the movies are bundled:Theater A will pay$15,000 for bothTheater B will pay$14,000 for bothIf each were charged the lower of the two prices,total revenue will be$28,000.第68页

45、/共112页Slide 69BundlingNegative Correlated:Profitable to BundleA pays more for Wind($12,000)than B($10,000).B pays more for Gertie($4,000)than A($3,000).Relative Valuations第69页/共112页Slide 70BundlingIf the demands were positively correlated(Theater A would pay more for both films as shown)bundling wou

46、ld not result in an increase in revenue.Gone with the Wind Getting Gerties GarterTheater A$12,000$4,000Theater B$10,000$3,000Relative Valuations第70页/共112页Slide 71BundlingIf the movies are bundled:Theater A will pay$16,000 for bothTheater B will pay$13,000 for bothIf each were charged the lower of th

47、e two prices,total revenue will be$26,000,the same as by selling the films separately.第71页/共112页Slide 72BundlingBundling Scenario:Two different goods and many consumersMany consumers with different reservation price combinations for two goods第72页/共112页Slide 73Reservation Pricesr2(reservationprice Go

48、od 2)r1(reservation priceGood 1)$5$10$5$10$6$3.25$8.25$3.25ConsumerAConsumerCConsumerBConsumer A is willing to pay up to$3.25 for good 1 andup to$6 for good 2.第73页/共112页Slide 74Consumption Decisions WhenProducts are Sold Separatelyr2r1P2IIConsumers buyonly good 2P1Consumers fall intofour categories

49、basedon their reservationprice.IConsumers buyboth goodsIIIConsumers buyneither goodIVConsumers buyonly Good 1第74页/共112页Slide 75Consumption DecisionsWhen Products are Bundledr2r1Consumers buy the bundlewhen r1+r2 PB(PB=bundle price).PB=r1+r2 or r2=PB-r1Region 1:r PBRegion 2:r PB)Consumers donot buy b

50、undle(r PB)第75页/共112页Slide 76The effectiveness of bundling depends upon the degree of negative correlation between the two demands.Consumption DecisionsWhen Products are Bundled第76页/共112页Slide 77Reservation Pricesr2r1P2P1If the demands are perfectly positivelycorrelated,the firmwill not gain by bund