有市场势力的定价.pptx

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1、Slide 1Topics to be DiscussedCapturing Consumer SurplusPrice DiscriminationIntertemporal Price Discrimination and Peak-Load Pricing第1页/共113页Slide 2Topics to be DiscussedThe Two-Part TariffBundlingAdvertising第2页/共113页Slide 3IntroductionPricing without market power(perfect competition)is determined by

2、 market supply and demand.The individual producer must be able to forecast the market and then concentrate on managing production(cost)to maximize profits.第3页/共113页Slide 4IntroductionPricing with market power(imperfect competition)requires the individual producer to know much more about the characte

3、ristics of demand as well as manage production.第4页/共113页Slide 5Capturing Consumer SurplusQuantity$/QDMRPmaxMCIf price is raised above P*,the 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*

4、-consumer surplus(A).BP2Beyond Q*,price willhave to fall to create a consumer surplus(B).第5页/共113页Slide 6Capturing Consumer SurplusP*Q*:single 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:compe

5、titive priceQuantity$/QDMRPmaxMCPCAP*Q*P1BP2第6页/共113页Slide 7Capturing Consumer SurplusQuantity$/QDMRPmaxMCPCAP*Q*P1BP2QuestionHow can the firmcapture the consumer surplusin A and sell profitably in B?AnswerPrice discriminationTwo-part tariffsBundling第7页/共113页Slide 8Capturing Consumer SurplusPrice di

6、scrimination is the charging of different prices to different consumers for similar goods.第8页/共113页Slide 9Price DiscriminationFirst Degree Price DiscriminationCharge a separate price to each customer:the maximum or reservation price they are willing to pay.第9页/共113页Slide 10P*Q*Without price discrimi

7、nation,output is Q*and price is P*.Variable profit is the area between the MC&MR(yellow).Additional Profit From Perfect First-Degree Price DiscriminationQuantity$/QPmaxWith perfect discrimination,eachconsumer pays the maximumprice they are willing to pay.Consumer surplus is the area above P*and betw

8、een0 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 to outputQ*(purple)Q*PC第10页/共113页Slide 11P*Q*Consumer surplus when a single price P*is charged.Variable profit when a single price P*is charged.Additional pro

9、fit fromperfect price discriminationQuantity$/QPmaxD=ARMRMCQ*PCWith perfect discrimination Each customer pays their reservation priceProfits increaseAdditional Profit From Perfect First-Degree Price Discrimination第11页/共113页Slide 12QuestionWhy would a producer have difficulty in achieving first-degre

10、e price discrimination?Answer1)Too many customers(impractical)2)Could not estimate the reservation price for each customerAdditional Profit From Perfect First-Degree Price Discrimination第12页/共113页Slide 13Price DiscriminationFirst Degree Price DiscriminationThe model does demonstrate the potential pr

11、ofit(incentive)of practicing price discrimination to some degree.第13页/共113页Slide 14Price DiscriminationFirst Degree Price DiscriminationExamples 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:

12、Lawyers,doctors,accountantsCar salesperson(15%profit margin)Colleges and universities第14页/共113页Slide 15First-Degree PriceDiscrimination in PracticeQuantityDMRMC$/QP2P3P*4P5P6P1Six prices exist resultingin higher profits.With a single priceP*4,there are few consumers andthose who pay P5 or P6 may hav

13、e a surplus.Q第15页/共113页Second-Degree Price DiscriminationQuantity$/QDMRMCACP0Q0Without discrimination:P=P0 and Q=Q0.With second-degreediscrimination there are threeprices P1,P2,and P3.(e.g.electric utilities)P1Q11st BlockP2Q2P3Q32nd Block 3rd BlockSecond-degree pricediscrimination is pricingaccordin

14、g to quantityconsumed-or in blocks.第16页/共113页Second-Degree Price DiscriminationQuantity$/QDMRMCACP0Q0P1Q11st BlockP2Q2P3Q32nd Block 3rd BlockEconomies of scale permit:Increase consumer welfareHigher profits第17页/共113页Slide 18Price DiscriminationThird Degree Price Discrimination1)Divides the market in

15、to two-groups.2)Each group has its own demand function.第18页/共113页Slide 19Price DiscriminationThird Degree Price Discrimination3)Most common type of pricediscrimination.Examples:airlines,liquor,vegetables,discounts to students and senior citizens.第19页/共113页Slide 20Price DiscriminationThird Degree Pri

16、ce Discrimination4)Third-degree price discrimination is feasible when the seller can separate his/her market into groups who have different price elasticities of demand(e.g.business air travelers versus vacation air travelers)第20页/共113页Slide 21Price DiscriminationThird Degree Price DiscriminationObj

17、ectivesMR1=MR2MC1=MR1 and MC2=MR2MR1=MR2=MC第21页/共113页Slide 22Price DiscriminationThird Degree Price DiscriminationP1:price first groupP2:price second groupC(Qr)=total cost of QT=Q1+Q2Profit()=P1Q1+P2Q2-C(Qr)第22页/共113页Slide 23Price DiscriminationThird Degree Price DiscriminationSet incremental for sa

18、les to group 1=0 第23页/共113页Slide 24Price DiscriminationThird Degree Price DiscriminationSecond group of customers:MR2=MCMR1=MR2=MC 第24页/共113页Slide 25Price DiscriminationThird Degree Price DiscriminationDetermining relative prices 第25页/共113页Slide 26Price DiscriminationThird Degree Price Discriminatio

19、nDetermining relative prices Pricing:Charge higher price to group with a low demand elasticity 第26页/共113页Slide 27Price DiscriminationThird Degree Price DiscriminationExample:E1=-2&E2=-4 P1 should be 1.5 times as high as P2第27页/共113页Slide 28Third-Degree Price DiscriminationQuantityD2=AR2MR2$/QD1=AR1M

20、R1Consumers are divided intotwo groups,with separatedemand curves for each group.MRTMRT=MR1+MR2第28页/共113页Slide 29Third-Degree Price DiscriminationQuantityD2=AR2MR2$/QD1=AR1MR1MRTMCQ2P2QTQT:MC=MRTGroup 1:P1Q1;more elasticGroup 2:P2Q2;more inelasticMR1=MR2=MCQT control MCQ1P1MC=MR1 at Q1 and P1第29页/共1

21、13页Slide 30No Sales to Smaller MarketEven if third-degree pricediscrimination is feasible,it doesntalways pay to sell to both groupsof consumers if marginal cost is rising.第30页/共113页Slide 31No Sales to Smaller MarketQuantityD2MR2$/QMCD1MR1Q*P*Group one,with demand D1,are not willing to pay enoughfor

22、 the good tomake pricediscrimination profitable.第31页/共113页Slide 32The Economics of Coupons and RebatesThose 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 al

23、low firms to price discriminate.Price Discrimination第32页/共113页Slide 33Price Elasticities of Demand for Users Versus Nonusers of CouponsToilet 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 ElasticityProductNonuse

24、rsUsers第33页/共113页Slide 34Cat food-0.49-1.13Frozen entre-0.60-0.95Gelatin-0.97-1.25Spaghetti sauce-1.65-1.81Crme rinse/conditioner-0.82-1.12Soup-1.05-1.22Hot dogs-0.59-0.77Price ElasticityProductNonusersUsersPrice Elasticities of Demand for Users Versus Nonusers of Coupons第34页/共113页Slide 35The Econom

25、ics of Coupons and RebatesCake MixNonusers of coupons:PE=-0.21Users:PE=-0.43第35页/共113页Slide 36The Economics of Coupons and RebatesCake Mix Brand(Pillsbury)PE:8 to 10 times cake mix PEExamplePE Users:-4PE Nonusers:-2第36页/共113页Slide 37The Economics of Coupons and RebatesUsing:Price of nonusers should

26、be 1.5 times usersOr,if cake mix sells for$1.50,coupons should be 50 cents 第37页/共113页Slide 38Airline FaresDifferences 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 have choices and ar

27、e more price sensitive.第38页/共113页Slide 39Elasticities of Demand for Air Travel Price-0.3-0.4-0.9 Income1.21.21.8Fare CategoryElasticityFirst-ClassUnrestricted CoachDiscount第39页/共113页Slide 40Airline FaresThe airlines separate the market by setting various restrictions on the tickets.Less expensive:no

28、tice,stay over the weekend,no refundMost expensive:no restrictions第40页/共113页Slide 41Intertemporal PriceDiscrimination and Peak-Load PricingSeparating the Market With TimeInitial release of a product,the demand is inelasticBookMovieComputer第41页/共113页Slide 42Separating the Market With TimeOnce this ma

29、rket has yielded a maximum profit,firms lower the price to appeal to a general market with a more elastic demand Paper back booksDollar MoviesDiscount computersIntertemporal PriceDiscrimination and Peak-Load Pricing第42页/共113页Slide 43Intertemporal Price DiscriminationQuantityAC=MC$/QOver time,demand

30、becomesmore elastic and price is reduced to appeal to the mass market.Q2MR2D2=AR2P2D1=AR1MR1P1Q1Consumers are dividedinto groups over time.Initially,demand is lesselastic resulting in a price of P1.第43页/共113页Slide 44Demand for some products may peak at particular times.Rush hour trafficElectricity-l

31、ate summer afternoonsSki resorts on weekendsIntertemporal PriceDiscrimination and Peak-Load PricingPeak-Load Pricing第44页/共113页Slide 45Capacity restraints will also increase MC.Increased MR and MC would indicate a higher price.Peak-Load PricingIntertemporal PriceDiscrimination and Peak-Load Pricing第4

32、5页/共113页Slide 46MR is not equal for each market because one market does not impact the other market.Peak-Load PricingIntertemporal PriceDiscrimination and Peak-Load Pricing第46页/共113页Slide 47MR1D1=AR1MCP1Q1Peak-load price=P1.Peak-Load PricingQuantity$/QMR2D2=AR2Off-load price=P2.Q2P2第47页/共113页Slide 4

33、8How 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 book?第48页/共113页Slide 49How 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

34、book impact your decision?第49页/共113页Slide 50What Do You Think?3)How do you determine the price for the paperback edition?How to Price a Best Selling Novel第50页/共113页Slide 51The Two-Part TariffThe purchase of some products and services can be separated into two decisions,and therefore,two prices.第51页/

35、共113页Slide 52The Two-Part TariffExamples1)Amusement ParkPay to enterPay for rides and food within the park2)Tennis ClubPay to joinPay to play第52页/共113页Slide 53The Two-Part TariffExamples3)Rental of Mainframe ComputersFlat FeeProcessing Time4)Safety RazorPay for razorPay for blades第53页/共113页Slide 54T

36、he Two-Part TariffExamples5)Polaroid FilmPay for the cameraPay for the film第54页/共113页Slide 55The Two-Part TariffPricing 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.第55页/共113页Slide 56Usage pri

37、ce P*is set whereMC=D.Entry price T*is equal to the entire consumer surplus.T*Two-Part Tariff with a Single ConsumerQuantity$/QMCP*D第56页/共113页Slide 57D2=consumer 2D1=consumer 1Q1Q2The price,P*,will be greater than MC.Set T*at the surplus value of D2.T*Two-Part Tariff with Two ConsumersQuantity$/QMCA

38、BC第57页/共113页Slide 58The Two-Part TariffThe Two-Part Tariff With Many Different ConsumersNo 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:High sales and falling profit with lower price and more entrants.第58页/共113页Slide 59The Two-P

39、art TariffThe Two-Part Tariff With Many Different ConsumersTo find optimum combination,choose several combinations of P,T.Choose the combination that maximizes profit.第59页/共113页Slide 60Two-Part Tariff withMany Different ConsumersTProfit:entry fee:salesT*Total profit is the sum of the profit from the

40、 entry fee andthe profit from sales.Both depend on T.第60页/共113页Slide 61The Two-Part TariffRule of ThumbSimilar demand:Choose P close to MC and high TDissimilar demand:Choose high P and low T.第61页/共113页Slide 62The Two-Part TariffTwo-Part Tariff With A TwistEntry price(T)entitles the buyer to a certai

41、n number of free unitsGillette razors with several bladesAmusement parks with some tokensOn-line with free time第62页/共113页Slide 63Polaroid Cameras1971 Polaroid introduced the SX-70 cameraWhat Do You Think?How would you price the camera and film?第63页/共113页Slide 64Polaroid CamerasHint第64页/共113页Slide 65

42、Pricing Cellular Phone ServiceQuestionWhy do cellular phone providers offer several different plans instead of a single two-part tariff with an access fee and per-unit charge?第65页/共113页Slide 66BundlingBundling is packaging two or more products to gain a pricing advantage.Conditions necessary for bun

43、dlingHeterogeneous customersPrice discrimination is not possibleDemands must be negatively correlated第66页/共113页Slide 67BundlingAn example:Leasing“Gone with the Wind”&“Getting Gerties Garter.”The reservation prices for each theater and movie are:Gone with the Wind Getting Gerties GarterTheater A$12,0

44、00$3,000Theater B$10,000$4,000第67页/共113页Slide 68BundlingRenting the movies separately would result in each theater paying the lowest reservation price for each movie:Maximum price Wind=$10,000Maximum price Gertie=$3,000Total Revenue=$26,000第68页/共113页Slide 69BundlingIf the movies are bundled:Theater

45、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69页/共113页Slide 70BundlingNegative 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).Relati

46、ve Valuations第70页/共113页Slide 71BundlingIf the demands were positively correlated(Theater A would pay more for both films as shown)bundling would 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71页/共113页Slid

47、e 72BundlingIf 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 the two prices,total revenue will be$26,000,the same as by selling the films separately.第72页/共113页Slide 73BundlingBundling Scenario:Two different goods and many

48、 consumersMany consumers with different reservation price combinations for two goods第73页/共113页Slide 74Reservation Pricesr2(reservationprice Good 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

49、.第74页/共113页Slide 75Consumption Decisions WhenProducts are Sold Separatelyr2r1P2IIConsumers buyonly good 2P1Consumers fall intofour categories basedon their reservationprice.IConsumers buyboth goodsIIIConsumers buyneither goodIVConsumers buyonly Good 1第75页/共113页Slide 76Consumption DecisionsWhen Produ

50、cts 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 bundle(r PB)第76页/共113页Slide 77The effectiveness of bundling depends upon the degree of negative correlation between the two demands.Consumption DecisionsWhen P