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Questions tagged [pricing]

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19 votes
6 answers
5k views

What is the likely result of rent control in Berlin?

What predictions does economics make about the likely result of this policy in Berlin of capping rent prices. Berlin is freezing the rents of 1.5 million apartments for the next five years starting ...
FreeMarketUnicorn's user avatar
9 votes
2 answers
171 views

What are some different methods for pricing electricity?

I know that in New Zealand, the wholesale price of electricity is set using a spot market, whereby every half hour, each of the electricity producers provide offers for how much electricity they can ...
dwjohnston's user avatar
  • 2,036
8 votes
4 answers
276 views

Why do some businesses choose scarcity as their business model instead of raising the price to meet the demand?

Here are some examples of what I'm talking about: Mass events such as Burning Man, the Olympics, and the World Cup sell out tickets very quickly which forces fans to resort to scalping or using bots ...
JonathanReez's user avatar
8 votes
1 answer
213 views

Hedging with volatility swaps?

I'm studying financial derivatives, and became curiosity in volatility products, more specifically volatility swaps. It always intrigued me how can you create products based on volatility. Who is ...
CMPSoares's user avatar
  • 201
7 votes
4 answers
11k views

Why doesn't Barnes and Noble just lower its prices?

For my birthday, I wanted a cookbook. So I went to Barnes and Noble and selected it: $40. Before I got the register I checked it on Amazon: $20. I started price matching every single cookbook I ...
Danny Rodriguez's user avatar
7 votes
3 answers
165 views

Is there an economic analysis of how piracy allows a product to take a hegemonic position?

There's an interesting situation with the likes of Photoshop, where the software being pirated actually increases its market usage, and the software becomes the de facto standard, in part due to ...
dwjohnston's user avatar
  • 2,036
7 votes
3 answers
578 views

If rent control "doesn't work" and supply induces demand, how can cities improve affordability?

Suppose we aim that moderately poor people (let's say 1.5× minimum wage) can afford the rent for an apartment meeting minimum quality standards and located within city limits. This may be a political ...
gerrit's user avatar
  • 1,754
6 votes
4 answers
268 views

What does economics say about "price gouging" during an emergency?

Many states have laws against "price gouging" during an emergency. Are these laws counterproductive? Take the current situation with toilet paper and water. When someone sees rolls of toilet paper ...
FreeMarketUnicorn's user avatar
6 votes
2 answers
7k views

Effect of property tax on rent

Suppose the government puts a tax on all apartment owners (e.g. a certain percentage of the apartment value), whether or not the apartment is rented. Will this tax cause an increase in rent? From an ...
Erel Segal-Halevi's user avatar
5 votes
1 answer
258 views

Do 'liquidity pools' effectively determine market price?

First, lets be clear - I'm not pitching a crypto here, and I'm not seriously interested in Safemoon, which seems to be a pyramid scheme. However, I was investigated Safemoon, and discovered this ...
dwjohnston's user avatar
  • 2,036
4 votes
2 answers
149 views

Externality and Output

In a positive externality, can government just set the price to the socially efficient price instead of a subsidy to correct an externality?
user avatar
4 votes
1 answer
48 views

What's the name of this pairwise price-setting scheme?

Two siblings inherit equal shares of a house. To decide who gets to live in it, they each bid what they think the other half is worth. The person with the higher bid gets it, and pays the other ...
eric_kernfeld's user avatar
4 votes
1 answer
107 views

Why has Apple increased app store prices in the UK?

Apple have recently announced an increase in app store prices, ostensibly due to the weakening of the pound following the Brexit vote and its fallout. Why has apple done this when the marginal cost ...
James's user avatar
  • 211
4 votes
1 answer
1k views

How does the Uber's pricing model work?

I'm working on a paper on the sharing economy, and in particular on its economic implications. I am aware of the surge pricing model that Uber adopts, and of how it works. But I'm wondering on what ...
Gian Segato's user avatar
4 votes
0 answers
131 views

Why do two-sided marketplaces often charge both sides of the transaction?

Why do marketplace apps often charge both sides of the transaction, when charging one side could raise as much (or more) revenue and be simpler? i.e. if the marketplace knows which side of the market ...
dss's user avatar
  • 141
4 votes
0 answers
206 views

Dynamic demand model in many good competitive markets and price optimization

This is a question about demand models, price optimization, dynamic pricing, big data, online learning, so I will cross-post in other communities. $\mathbf{Background}$ I am interested in dynamic ...
VictorZurkowski's user avatar
3 votes
4 answers
2k views

Why do companies launch products at much higher prices, only to reduce the price drastically after a few months?

I see this to be a prevalent trend - companies too often launch products at much higher prices than they know is gonna lead to good sales numbers, only to reduce the price drastically after a few ...
Kristada673's user avatar
3 votes
2 answers
2k views

Why doesn't Costco simply raise prices and nix the membership fee?

I know little about the field of economics. I realize this question may be too rudimentary for this forum but I am sure someone here can explain this. My question concerns Costco, which is a ...
Kyle's user avatar
  • 243
3 votes
1 answer
340 views

Does the Labor Theory of Value hold in the long term in competitive markets?

Most criticisms of the Labor Theory of Value I have come across go something like this quote from Carl Menger: There is no necessary and direct connection between the value of a good and whether, or ...
markv12's user avatar
  • 165
3 votes
1 answer
251 views

Why does bond price tend to 100?

For example: if a bond got a 1% coupon, and tomorrow is the maturity date, so tomorrow I will have 101. So, in my opinion a bond price should tend to notional+coupon, because today I want this amount ...
Castore's user avatar
  • 31
3 votes
1 answer
43 views

What will be the Effect of the Russian oil Price Cap

G7 countries have just announced that they will not buy oil from Russia unless the price is USD 60/barrel or below. What will be the effect of this cap- will it be an effective economic sanction? Why ...
dm63's user avatar
  • 1,248
3 votes
1 answer
187 views

Proof of DCF model by mathematical induction

I am confident with the concept of DCF. However, I wanted to check the following proof given that if investors hold a share in $ t $, sell it at $t+1$, receive dividend $\ D_{t+1} $ and the price at $...
stillwaters's user avatar
3 votes
0 answers
177 views

How should I calculate bulk selling price for a small business?

Some friends of mine run a small business, in a small garage-like space, with a few employees, making and selling "plumbuses". The typical customer orders about 5 plumbuses at a time. When I heard ...
Conner Johnston's user avatar
2 votes
2 answers
220 views

Different methods to calculate price elasticity

I was testing different methods to calculate price elasticities in simple theoretical scenarios and I encountered a seemingly discrepancy between two very popular methodologies. Methodology 1: use the ...
neutrino's user avatar
2 votes
2 answers
128 views

What's the term for elastic pricing?

What I've called "elastic pricing", has a true economics name that I believe I once heard. Here's the notion: I walked into a gas station to buy a fountain drink. I only brought a dollar with me, but ...
Devin's user avatar
  • 121
2 votes
2 answers
2k views

How to estimate empirically a demand curve

Suppose I have a small business that sell ice creams. An Icecream cost 2$, and every day I have different values of sales. ...
sparkle's user avatar
  • 177
2 votes
1 answer
73 views

Data on average/typical retail markups

Can anybody provide a reliable source that gives data on retail markups? My end goal is to make a fairly high-level statement along the lines of "a typical retail markup (across all industries) is X%",...
Ubiquitous's user avatar
  • 16.9k
2 votes
1 answer
184 views

Can an overall improvement in technology make the owners of one factor worse off?

In a closed two-factor economy, suppose there is a biased technological improvement that increases the productivity of both factors, but one more than the other. Can this reduce the aggregate returns (...
andrewH's user avatar
  • 325
2 votes
2 answers
114 views

How to correctly calculate my real salary?

My salary is $900 after taxes. This is quite a large salary for my country. And when my parents found out about it, they said that I earn a lot. But in my opinion it is not so, because in order to do ...
Tamila Ambeon's user avatar
2 votes
2 answers
89 views

A question about intertemporal price discrimination

Usually intertemporal price discrimination worked like this : Releasing something at higher price, then lower the price later. But did this work in reverse too? I've seen some example on video games ...
Fahrul's user avatar
  • 41
2 votes
1 answer
104 views

What is the subgame perfect pricing policy for seller?

Suppose there is a seller S who is selling to 3 different potential customers H, M, L The good is a durable good and it's utility in terms of dollar equivalent is as in the picture below: So if H ...
Stupid_Intern's user avatar
2 votes
1 answer
133 views

Phenomenon of equal prices without price collusion

Some time ago, I came across a term describing a specific phenomenon observed in free markets. I'm now looking for this term. When comparing prices of certain staples in some countries, one quickly ...
UTF-8's user avatar
  • 121
2 votes
2 answers
123 views

Why are prices considered the best information we could have?

We often talk about information as pricing being the best information or reflection of different aggregate pieces of information existing on markets. Why do we then also often hear that some prices do ...
Nathan Furnal's user avatar
2 votes
1 answer
292 views

Block pricing for different products

How is a block price decided when there are many products to be sold? For example the buffet in various restaurants or combos in McDonalds or KFC (like the bucket buddy). Can somebody point me to ...
Joy Chopra's user avatar
2 votes
1 answer
243 views

Why did the price level of government consumption increase in the United States?

From The Penn World Tables (PWT7): Before 1970, the price levels of the three GDP components had been going in parallel. In the late 60s, the price level of government consumption went up (the Nixon ...
Anton Tarasenko's user avatar
2 votes
2 answers
56 views

Drug pricing, amount of sales and R&D costs

I've recently learned about Zolgensma drug that is currently priced at \$2.1 million (read more here) Since the biggest factor in price is probably R&D costs I wonder why won't they decrease the ...
ScienceSamovar's user avatar
2 votes
0 answers
33 views

What pricing strategies does Amazon use and how do they affect consumers' purchasing decisions?

As a frequent Amazon customer, I have noticed that the prices of products I am interested in buying often fluctuate over time. These changes could either be an increase or decrease in price, and I ...
paulmuaddib's user avatar
2 votes
0 answers
202 views

The pricing of complementary goods if one of them is purchased only once

Sorry for asking a homework question, however, I'll try to generalize it as much as possible for a future use. There are two complementary goods (A and B). B is produced under perfect competition, ...
sempol's user avatar
  • 43
2 votes
0 answers
29 views

Are there some guidelines/strategies for deciding between showing a list price vs "call for price"?

I suppose as a buyer many have been on the receiving end of "call for price" price discrimination or one of its less unpleasantly sounding synonyms. Now it's generally known that the average Joe hates ...
the gods from engineering's user avatar
2 votes
0 answers
31 views

Becker Social Pricing and Lack of Smooth Demand

I was reading an article on Becker Social Pricing, where your demand for a good depends on other people's demand for the good. So basically this paper is meant to be a primer into explaining why some ...
Kitsune Cavalry's user avatar
  • 6,628
1 vote
2 answers
38 views

Is there a correlation between pharmaceutical prices and drug dealers?

Question: Is there a quantitative or some kind of correlation between the number of drug dealers in a certain region and the price of pharmaceutical drugs? This is for a case I'm working on, but I ...
Frank W's user avatar
  • 121
1 vote
1 answer
90 views

Distance transported used to price goods in Marxism

A friend mentioned that in Marxism, the distance a good was transported was used to determine the price of said good. I can't find anything on the Internet to support this claim, although I might be ...
52d6c6af's user avatar
  • 561
1 vote
1 answer
109 views

Should the government regulate the price of bananas? [closed]

Diclaimer: This is not a homework question. Every word of it was written originally by me. Hypothetical Scenario Alice is shopping for groceries and thinks the current price of bananas at ...
FreeMarketUnicorn's user avatar
1 vote
1 answer
92 views

Help finding the right term - Behavioural Finance / Pricing jargon

There is a phenomenon used in Economics(?)/Marketing/Pricing/Psychology when selecting the right price for your product. Within a certain price range, the customer is insensitive to changes in the ...
afora377's user avatar
  • 111
1 vote
1 answer
39 views

Issues if insurance is not compulsory for population

So I remember this in my Econ 101 course thing.. eg. If all cars are legally required to be insured, insurers work off a population statistic to calculate cost of crashes/ individual issues (...
Ilya Grushevskiy's user avatar
1 vote
1 answer
176 views

meaning of face value as a percentage

What does it mean conceptually when the face value of a bond is equal to 100%? What does it mean when the FV is higher or lower 100%
user19251203's user avatar
1 vote
2 answers
651 views

Monthly price elasticity and possibility of using daily values

I am calculating the price elasticity as a starting point to find a theoretical optimal price that would maximize our revenue. I am looking at 2 years data and to use the price elasticity formula, I ...
axel2020's user avatar
1 vote
1 answer
78 views

Problem finding Demand Function [closed]

I am analyzing pricing for a new streaming service for a school project. My thought is to calculate the demand function of a player in the same industry and then calculate the optimal price. I am a ...
Chess Meister's user avatar
1 vote
2 answers
148 views

Economies of scale: when is it disadvantageous?

So, I watched a video on economies of scale. It makes sense to me but I'm wondering, is there a point where say doubling the production rate makes the product even more expensive? How can I figure out ...
Caters's user avatar
  • 111
1 vote
1 answer
10k views

How to derive an aggregate demand function (and optimal uniform price) from two demand functions?

If I have two demand functions $P_1=100-10X_1$ and $P_2=50-10X_2$ and $X_1=40$ and $X_2=60$ with $MC=10$ We have two consumer groups: 1 and 2, where 1 has a higher willingness to pay, and we have ...
Mataunited17's user avatar