Pricing Strategy

4/16/01


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Table of Contents

Pricing Strategy

Marginal revenue and selling costs

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Profit Maximization

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Maximizing Profit When Marginal Revenue Equals Marginal Cost

Monopoly

Monopoly

Monopoly

Monopoly

Example of Profit Maximization

Example of Profit Maximization

Example of Profit Maximization

Example of Profit Maximization

Markup Rules

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Elasticity of Demand and Price Markup

Summary

Switching costs ( �lock-in�)

Examples of switching costs:

Examples of Switching Costs

Switching Costs

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Consumer Surplus

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Consumer surplus & demand curve

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Consumer Surplus

Consumer surplus

Tools of pricing strategy

Different types of price discrimination

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Third-Degree Price Discrimination

Third-Degree Price Discrimination

Third-Degree Price Discrimination

Sales, Coupons, Random Discounts

Price Elasticities of Demand for Users Versus Nonusers of Coupons

Price Elasticities of Demand for Users Versus Nonusers of Coupons

Airlines

Demand

Pricing

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NYNEX Case

NYNEX profits & Revenues

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The Two-Part Tariff

The Two-Part Tariff

The Two-Part Tariff

The Two-Part Tariff

The Two-Part Tariff

Two-Part Tariff with a Single Consumer

Two-part tariffs with varied consumers:

Two-Part Tariff with Two Consumers

The Two-Part Tariff

The Two-Part Tariff

Two-Part Tariff with Many Different Consumers

The Two-Part Tariff

The Two-Part Tariff

Bundling

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Consumption Decisions When Products are Sold Separately

Consumption Decisions When Products are Bundled

Reservation Prices

Reservation Prices

Mixed Versus Pure Bundling

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Mixed Bundling with Zero Marginal Costs

Mixed Bundling with Zero Marginal Costs

Bundling by Pricing

Pricing Cell-Phones

Different two-part tariffs

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Pricing policy

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Verizon pricing

Verizon Pricing

Verizon pricing

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Verizon Pricing

Verizon Pricing

Alternative pricing policy

Key aspects of pricing policy

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Key aspects

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Conclusions

Limiting Market Power: The U.S. Antitrust Laws

Limiting Market Power: The U.S. Antitrust Laws

Limiting Market Power: The U.S. Antitrust Laws

Limiting Market Power: The U.S. Antitrust Laws

Limiting Market Power: The U.S. Antitrust Laws

Limiting Market Power: The U.S. Antitrust Laws

Limiting Market Power: The U.S. Antitrust Laws

Limiting Market Power: The U.S. Antitrust Laws

Limiting Market Power: The U.s. Antitrust Laws

Limiting Market Power: The U.S. Antitrust Laws

Limiting Market Power: The U.S. Antitrust Laws

Limiting Market Power: The U.S. Antitrust Laws

Limiting Market Power: The U.S. Antitrust Laws

Author: Brian Hebb

Email: [email protected]

Home Page: www.gsb.columbia.edu/faculty/gheal