Questions tagged [pricing]

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0answers
25 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 ...
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0answers
31 views

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 ...
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1answer
53 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 ...
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1answer
96 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 ...
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2answers
44 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 ...
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2answers
96 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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1answer
87 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 ...
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0answers
66 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 ...
2
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2answers
68 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 ...
6
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4answers
189 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 ...
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3answers
474 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 ...
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6answers
4k 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 ...
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1answer
65 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 ...
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1answer
56 views

Question Regarding Equilibrium Price & Surplus

So here's an example of a standard Supply & Demand Relationship for an Individual Supplier: As a supplier, for 1 dollar, I'll produce 1 unit of something. For 2 dollars, I'll produce 2 units, for ...
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0answers
30 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,...
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3answers
135 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 ...
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4answers
693 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 ...
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2answers
79 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 ...
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2answers
234 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 ...
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1answer
64 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 ...
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2answers
33 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 ...
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1answer
54 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 ...
0
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1answer
111 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 ...
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0answers
100 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 ...
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1answer
248 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, ...
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1answer
102 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 $...
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2answers
124 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 ...
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1answer
45 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 ...
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1answer
107 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 ...
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1answer
117 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 ...
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0answers
26 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 ...
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1answer
18 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?
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1answer
66 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 ...
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1answer
96 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 ...
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1answer
36 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 (...
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2answers
119 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 ...
2
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1answer
58 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%",...
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2answers
115 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 ...
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1answer
46 views

Locational Marginal Pricing when different prices and when the same?

I am kinda confused about this YouTube video. So the LMP with no constraints is the same in both nodes. For me it was the same because I used those offers from node 1 also in node 2 and we chose the ...
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0answers
91 views

The Saturn pricing model, did it work?

Has there been a post-mortem on the Saturn pricing model? For those who do not remember, in the 1990s GM sponsored a new car model, the Saturn, which featured "no haggle" pricing. The car would be ...
2
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1answer
171 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 (...
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0answers
102 views

Metric for evaluating sales with dynamic pricing

Suppose you have a sausage maker. He buys batches of ground meat, then makes and sells sausages. Suppose each batch of ground meat makes N sausages, and each batch has specific level of quality that ...
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1answer
93 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 ...
4
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1answer
98 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 ...
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4answers
6k 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 ...
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1answer
7k 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 ...
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0answers
30 views

How to dynamically update/calculate the price if we have the following values?

Need to update/calculate the price, the given values are: Reserve (Stock) (higher the price can be lower) Cost (the higher, the price can be higher) Sales Speed (the higher, the price can be higher) ...
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1answer
244 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 ...
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0answers
196 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 ...
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0answers
23 views

Where do economists look for reliable commodity prices for dairy products?

I would like to know the market commodity price of cream cheese. I know you can look up the price of gold in the Wall Street Journal. Where can I get info on dairy products like cream cheese?