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How to isolate cross-price elasticities for a price increase across a portfolio of substitutable products?

My business offers a portfolio of 4 products which are substitutes for one another. Over the years, we have increased the prices of these products by varying amounts, such that we can estimate the ...
Josh's user avatar
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1 answer
92 views

Can There Be a Dominant Strategy If Both Firms Choose to Match the Lowest Price in the Market in a Bertrand Model of Competition?

In a Bertrand duopoly model where firms choose to price match ie match the lowest price in the market, any price p∈[c,Pm] (where c is cost and Pm is the monopoly price) can be a Nash. Hence, there are ...
DR109's user avatar
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Relation between High government debt to GDP ratio, financial stability of a country and repricing effect on balance sheet of banks

Was reading an editorial in which author wrote following:- I understood it as follows: India having High Debt/GDP(around 84%), means Foreign portfolio investors(FPIs) will have less confidence to ...
MR LUN's user avatar
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2 votes
2 answers
249 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
1 vote
1 answer
181 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
2 votes
0 answers
34 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
0 votes
1 answer
30 views

Is this intuition correction? [duplicate]

For simplicity sake, let’s assume I am the only supplier in a market and have the same goal of making profit as other firms do. Let’s say I produce 300 units of some good. I look at the demand ...
Anthony Fallone's user avatar
2 votes
2 answers
116 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
3 votes
1 answer
44 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
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1 vote
0 answers
20 views

Question about surplus/excess supply

My question is regarding the problem in the image above. As you can see, it says that if I have 300 tons priced at 150 dollars per ton, I should lower my price to the equilibrium price of 100 dollars ...
Anthony Fallone's user avatar
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What mathematical rule might eliminate .99 pricing?

What mathematical rule would effectively eliminate .99 pricing? MOTIVATION In the year 2013, the government of Canada stopped minting pennies Suppose that the United States government wanted to ...
Toothpick Anemone's user avatar
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Pricing elasticity*coefficient from glm

Problem: I would like to understand the pricing elasticity in an industry while factoring in other independent variables that affect units sold. Where I am currently at: Much of the data for this ...
I_like_insights's user avatar
-1 votes
1 answer
31 views

Is dual pricing, arbitrage?

It was written in the current opener of Arbitrage in Wikipedia: In economics and finance, arbitrage is the practice of taking advantage of a difference in prices in two or more markets; To me, dual ...
al-harumi-jidan's user avatar
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0 answers
26 views

Are there any economic reasons why luxury goods should not be auctioned off, or at least dynamically priced, when facing shortages?

Over the last year many prominent examples come to mind, where there does not seem to be any limiting moral or ethical reasons, and are simply not available most of the time due to demand greatly ...
M. Y. Zuo's user avatar
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5 votes
1 answer
264 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
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1 vote
0 answers
67 views

Optimal price when elasticity of demand is positive? [closed]

I’m performing some exercises in order to get the optimal price of some product such a potato chips, biscuits, drinks, etc. But I’ve found that some of them have positive elasticities. This can makes ...
Red Noise's user avatar
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1 vote
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Is there a name for goods/services/rights/etc. for which the "direction" of payment in a transaction could vary based on circumstances?

For example, consider Amazon Hub Lockers, order pick-up boxes usually located in 3rd party retail venues such as drug/convenience stores, etc. Amazon benefits by reducing last mile delivery costs and ...
ShabbyDoo's user avatar
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1 vote
1 answer
145 views

Practical advice for calculating optimal prices

The company I work for is interested in making the pricing for its products more quantitative. I researched the topic and I found some theory for calculating optimal pricing in Microeconomics texts ...
Arthur's user avatar
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3 votes
1 answer
346 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
2 votes
2 answers
57 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
4 votes
2 answers
151 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?
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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
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4 votes
0 answers
133 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
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
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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
7 votes
4 answers
595 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
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
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
1 vote
0 answers
37 views

The centralized shift from barter to currency economy

Suppose some ancient king of small bronze age city-state wants to introduce universal currency instead of barter that is currently in overwhelming practice in his kingdom. In order to smooth the shift,...
Мікалас Кaрыбутоў's user avatar
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
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
0 votes
2 answers
84 views

What if price were a function of buyer's income?

If everyone's income were public information, would purely profit-seeking sellers benefit from charging different prices to people based on their different incomes? My intuition says yes because a ...
Jonah's user avatar
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1 vote
2 answers
663 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
81 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
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
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0 votes
1 answer
111 views

Why is the price of books set by the manufacturer rather than the distributor?

For almost all manufactured goods which the manufacturer doesn't sell directly to the end consumer, the manufacturer sells to a distributor, and the distributor is then free to resell the good to the ...
tparker's user avatar
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0 votes
1 answer
191 views

What is the monotone hazard rate assumption used for?

I was reading this article on advance purchase discounts and pricing in which the author uses the monotone hazard rate assumption. Why does the author use it? The article is Advance-purchase ...
AnderssonStock'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
0 votes
1 answer
459 views

Difference between the minimum selling price and the actual selling price

I'm actually wondering what the correct name for the difference between the minimum selling price and the actual selling price is? Let's say I'm having an product A. After all calculations(costs, ...
Felix Gerber's user avatar
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
1 vote
2 answers
149 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
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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
1 vote
1 answer
113 views

How to increase price gradually?

I sell so called "tokens" for so called Ether. I receive an arbitrary amount of Ether in a transaction. I sent back a calculated amount of tokens. I want the price of a token increase as more tokens ...
porton's user avatar
  • 119
2 votes
1 answer
134 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
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1 vote
0 answers
88 views

Why do some prices contain a sequence of a digit repeated several times?

I know about the psychology behind prices that end in 9 or 99, but I'm starting to notice that some prices contain the same digit (not 9) repeated two, three or even four times. For example, in this ...
Ilmer's user avatar
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0 votes
1 answer
24 views

Gold charts on different currencies

I have this two charts of gold prices for the last 60 days. One is in Dollars and the other in Euros. Why they are not an exact match?
Alferes's user avatar
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
3 votes
1 answer
255 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
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
2 votes
2 answers
129 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