Predatory pricing

Give the market what it wants. Some cannibalization but higher total volume. Another factor leading to price increases is overdemand. When a company cannot supply all of its customers, it can use one of the following pricing techniques: ➤ With delayed quotation pricing, the company does not set a final price until the product is finished or delivered. This is prevalent in industries with long production lead times. ➤ With escalator clauses, the company requires the customer to…

The Political Economy of International Trade Chapter Outline OPENING CASE: Why Are Global Food Prices Soaring? INTRODUCTION INSTRUMENTS OF TRADE POLICY Tariffs Subsides Country Focus: Subsidized Wheat Production in Japan Import Quotas and Voluntary Export Restraints Local Content Requirements Administrative Polices Antidumping Policies Management Focus: U.S. Magnesium Seeks Protection THE CASE FOR GOVERNMENT INTERVENTION…

monopoly will try to deter entry by Ramsey pricing subject to a normal profit constraint, (which maximises welfare given the constraint). If some technical requirements for the shape and behaviour of the cost function are met, an entrant cannot offer consumers a better deal than the incumbent and so the natural monopoly is sustainable. Nor is it possible for an entrant to come in to serve just part of the market. Without the cost conditions, Ramsey pricing is still welfare-maximising (but not…

However, the large drop in PalmKid’s contribution margin per unit combined with a decrease in the actual number of PalmPro units sold as well as a drop in the actual contribution margin per unit below budget, led to the total contribution margin being much lower than budgeted. Other factors could be discussed here––for example, it seems that the PalmKid did not achieve much success with a three digit price point––selling price was budgeted at $149 but dropped to $102. At the same time,…