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Cournot Oligopoly
Market structure with few firms competing on output.
Crude Estimate
Rough approximation of demand or cost without detailed data.
Higher Marginal Costs
Increased costs lead to higher profit-maximizing prices.
Identical Cost Structures
Firms in Cournot oligopoly have similar production costs.
Price Setting in Oligopoly
Firms set prices based on competitors' output decisions.
Consumer Willingness to Pay
Maximum price consumers are ready to pay.
First-Degree Price Discrimination
Charging each consumer their maximum willingness to pay.
Pricing Strategies
Methods to enhance profits beyond single pricing.
Two-Part Pricing
Charging a fixed fee plus a variable usage fee.
Block Pricing
Charging different prices for different quantity blocks.
Commodity Bundling
Selling multiple products together at a single price.
Market Interdependence
How firms' pricing decisions affect each other.
Oligopolistic Structure
Market dominated by a few large firms.
Price Discrimination Degrees
First, second, and third degree classifications.
Discount Strategy
Offering lower prices selectively to consumers.
Intense Price Competition
High competition leading to lower prices.
Special Cost Structures
Unique cost arrangements affecting pricing strategies.
Single-Price-Per-Unit Model
Charging all consumers the same price per unit.
Price Discrimination
Charging different prices for the same product.
Consumer Surplus
Difference between what consumers pay and their willingness.
Second-Degree Price Discrimination
Offering a schedule of declining prices for quantities.
Third-Degree Price Discrimination
Charging different prices based on consumer demographics.
Market Power
Ability of a firm to influence prices.
Demographic Pricing
Pricing strategy based on consumer characteristics.
Fixed Pricing
Charging the same price for all units sold.
Price Differentiation
Adjusting prices based on consumer willingness to pay.
Fixed Fee
Initial charge for purchasing rights.
Per-Unit Charge
Cost for each unit purchased.
All-or-None Decision
Consumers decide to purchase entire package.
Profit from Two-Part Pricing
Higher than single price strategy profits.
Consumer Valuation
Maximum amount a consumer is willing to pay.
Separate Pricing
Charging individual prices for each product.
Bundled Pricing
Single price for a combination of products.
Peak-Load Pricing
Higher prices during high demand periods.
Cross-Subsidization
Using profits from one product to subsidize another.
Manager's Knowledge
Influences pricing strategy effectiveness.
Peak Demand
High demand periods requiring higher prices.
Off-Peak Demand
Lower demand periods with reduced prices.
Full Capacity
Maximum output level a firm can achieve.
QH
Quantity at full capacity during peak demand.
QL
Quantity at optimal pricing during low demand.
High-Peak Pricing
Higher prices charged during peak demand times.
Low-Peak Pricing
Lower prices charged during off-peak demand.
Transfer Pricing
Pricing of goods between related business entities.
Cross-Subsidies
Profits from one product subsidize another product.
Internal Price
Price set within a firm for internal transactions.
Upstream Division
Division producing inputs for downstream divisions.
Downstream Division
Division assembling final products using inputs.
Double Marginalization
Price markup by both upstream and downstream divisions.
Optimal Transfer Price
Price where marginal revenue equals marginal cost.
Brand Loyalty
Consumer preference for a specific brand.
Randomized Pricing
Changing prices unpredictably to attract customers.
Bertrand Competition
Firms compete on price, selling similar products.
Price Wars
Competitive price reductions among firms.
Price matching
Commitment to match lower prices found by consumers.
Brand loyal customers
Consumers who consistently purchase from the same brand.
Advertising campaigns
Promotional efforts to enhance brand perception.
Randomized pricing
Strategy of varying prices to confuse competitors.
Consumer claims
Assertions made by consumers about lower prices.
Price competition
Strategy where firms lower prices to attract customers.
False claims
Misleading assertions about price advantages.
Consumer behavior
Patterns of purchasing decisions by consumers.
Frequent-filler strategy
Loyalty program offering rebates for gas purchases.
Consumer loyalty
Tendency of consumers to continue buying from a brand.
