[PDF] On The Strategic Importance Of Prices Versus Quantities eBook

Author : Luis Corchon
Publisher : Springer Science & Business Media
Page : 177 pages
File Size : 16,23 MB
Release : 2013-06-29
Category : Business & Economics
ISBN : 366222531X

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One of the most fascinating debates of our times is the discussion over the merits and capabilities of market economies. Very often, one sees strong endorsements to the idea that markets provide an efficient way of allocating resources. Some years ago, opposite views on this issue used to be very popular (at least in Europe) and were held by similarly qualified people. In my opinion, the contribution of economics to this question can not be dismissed on the grounds that economics still in its infancy and that this question is a "practical" one (whatever this means). Economics started with similar naive ideas, two hundred years ago. In particular it has taken a long time to realize that competition does not work in such a smooth way as many classical writers thought it did, and that many facts can not be explained by the theory of perfectly competitive markets. This issue is explored at depth in the Introduction to this Lectures. In this sense the contribution of the Theory of industrial Organization has been to make a convincing case for the view that monopoly and oligopoly can persist in the long run in a world populated by rational agents. Despite of the fact that we are far from having a satisfactory theory of how markets work, progress has been immense, and we certainly understand why current theories are still not completely satisfactory.

Author : Jill Thinnes
Publisher : LAP Lambert Academic Publishing
Page : 68 pages
File Size : 43,6 MB
Release : 2011-03
Category :
ISBN : 9783844317282

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In a monopoly, the equilibrium outcome is the same no matter if firms compete on price or on quantity. However, lots of firms have visible rivals with whom strategic interaction is a fact of life. This is known as imperfect competition. With imperfect competition, competing on price will lead to a different outcome than competing on quantity. Each firm needs to analyze what strategy, price or quantity, brings the highest profit for the firm and the highest surplus for the consumer. In order to compare and contrast price and quantity competition, two classical models of duopoly, the Cournot and the Bertrand model, are introduced. These two models can be analyzed according to different setups. Homogeneous and heterogeneous goods are considered. Also, it is important to distinguish between simultaneous and sequential move of the firms in their strategic interaction. The sequential choosing of actions makes the game dynamic and is known as the Stackelberg game. Furthermore, it is necessary to distinguish between exogenous and endogenous moving time decision of the firms. This analysis should be especially useful to students and researchers in Microeconomics.

Author : Michael Morris
Publisher : Praeger
Page : 232 pages
File Size : 29,70 MB
Release : 1990-04-24
Category : Business & Economics
ISBN :

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An important contribution to marketing literature, this volume offers a comprehensive guide to market-based pricing strategies. The authors present pricing as a relatively simple, but extremely powerful marketing tool--a creative variable which managers can manipulate to accomplish a wide variety of ends. Arguing that companies must move away from the traditional, short-term, reactive methods relied upon to set and manage prices, the authors call for a systematic, strategic and market-based approach to the pricing problem. Their central unifying theme is that pricing begins and ends with the customer and that every pricing action should be part of a larger pricing program build around the realities of customer needs and competitor pressures. Written with a minimum of jargon and amply illustrated with explanatory tables and figures, this is an excellent introduction to pricing for both seasoned and aspiring marketing and product managers. Morris and Morris begin by examining the overall concept of price as a statement of value. Subsequent chapters offer in-depth guidance on the development of market-based pricing, addressing such critical issues as pricing strategy over the product life cycle, linking pricing and marketing strategy, understanding and using elasticity, the psychology of pricing, and negotiating prices with customers. Particular attention is paid to the question of price differentials--charging different prices to different classes of consumers--and the legal and ethical ramifications of adopting strategies based on price differentials. The authors also explore cost-based pricing, industry and competitor analysis, pricing across the product line, and computers as an aid in pricing. Throughout, references to real-world cases and problems helps the manager to relate the concepts of market-based pricing to the pricing decisions and considerations actually confronted on the job.

Author : Jean Tirole
Publisher : MIT Press
Page : 1482 pages
File Size : 22,94 MB
Release : 1988-08-26
Category : Business & Economics
ISBN : 0262200716

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The Theory of Industrial Organization is the first primary text to treat the new industrial organization at the advanced-undergraduate and graduate level. Rigorously analytical and filled with exercises coded to indicate level of difficulty, it provides a unified and modern treatment of the field with accessible models that are simplified to highlight robust economic ideas while working at an intuitive level. To aid students at different levels, each chapter is divided into a main text and supplementary section containing more advanced material. Each chapter opens with elementary models and builds on this base to incorporate current research in a coherent synthesis. Tirole begins with a background discussion of the theory of the firm. In Part I he develops the modern theory of monopoly, addressing single product and multi product pricing, static and intertemporal price discrimination, quality choice, reputation, and vertical restraints. In Part II, Tirole takes up strategic interaction between firms, starting with a novel treatment of the Bertrand-Cournot interdependent pricing problem. He studies how capacity constraints, repeated interaction, product positioning, advertising, and asymmetric information affect competition or tacit collusion. He then develops topics having to do with long term competition, including barriers to entry, contestability, exit, and research and development. He concludes with a "game theory user's manual" and a section of review exercises. Important Notice: The digital edition of this book is missing some of the images found in the physical edition.

Author : William A. Pizer
Publisher :
Page : 26 pages
File Size : 22,88 MB
Release : 2016
Category : Comparative advantage (International trade)
ISBN :

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This paper considers how policy updates and trading of regulated quantities over time changes the traditional comparative advantage of prices versus quantities. Quantity regulation that can be traded over time leads firms to set current prices equal to expected future prices. A government seeking to maximize net societal benefits can take advantage of this behavior with a sequence of quantity policy updates that achieves the first best in all periods. Under price regulation where current prices remain fixed until future policy changes occur, no such opportunity exists to achieve the first best, and prices are never preferred. However, if we assume policy updates are driven in part by political "noise" rather than maximizing net societal benefits, the result changes and prices can again be preferred. The comparative advantage now depends the relative variance of noise shocks compared to true cost and benefit shocks. This contrasts sharply with the traditional comparative advantage that depends on the relative slopes of marginal costs and benefits. Applied to climate change, we estimate the comparative advantage of intertemporally tradable quantities (over prices) to be $2 billion over five years. This estimate grows if updates occur less frequently or could be made negative by political noise.

Author : Reinhard Selten
Publisher : Springer Science & Business Media
Page : 427 pages
File Size : 34,24 MB
Release : 2013-03-09
Category : Mathematics
ISBN : 3662096641

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The unifying theme of the 23 contributions to this book is the social interaction of rational individuals. The work of John C. Harsanyi on game theory, social choice, and the philosophy of science finds an echo in these essays. Contributions by well known game theorists and economists present a great variety of stimulating theoretical investigations. Part I contains six papers on non-cooperative game theory written by Maschler, Owen, Myerson, Peleg, Rosenmüller, Hart and Mas-Collel. Part II with three contributions by Kalei, Samet, van Damme, d'Aspremont, and Gérard-Varet is devoted to the use of non-cooperative game theory in the analysis of problems of mechanism design. Basic questions of non-cooperative game theory are discussed in three essays by Güth, Hardin, and Sugden in Part III. Applied game models are discussed in three papers by Friedman, Selten, and Shubik in Part IV. Problems of social choice are investigated in Part V which deals with utilitarianism and related topics in five contributions by Hammond, Binmore, Arrow, Roemer, and Broome. Finally, Part VI contains three papers: an interdisciplinary comparison of physics and economics by Samuelson, a methodological essay by Brock, and an appraisal of the work of John C. Harsanyi.