pricing under imperfect competition
Managerial Economics
Unit 10
Unit 10
Pricing under Imperfect Competition
Structure:
10.1 Introduction
Case Let
Objectives
10.2 Monopoly
10.3 Price Discrimination under Monopoly
10.4 Bilateral Monopoly
10.5 Monopolistic Competition
10.6 Oligopoly
10.7 Collusive Oligopoly and Price Leadership
10.8 Duopoly
10.9 Industry Analysis
10.10 Summary
10.11 Glossary
10.12 Terminal Questions
10.13 Answers
10.14 Case Study
Reference/E-Reference
10.1 Introduction
In the previous unit, we studied about price determination under perfect competition. We learnt how prices are determined in markets that are perfectly competitive. We also learnt about the functions of markets and how individual firms are different from industry. Although the theory of perfectly competitive markets is well rounded and robust, such markets are seldom found in the real world. Most markets are imperfect due to the variations in market characteristics. Conditions of entry and exit are quite different across markets and consumers possess dissimilar levels of information. The strong emergence of brands, proprietary technologies, increasing influence of media, government regulations and relative concentration of financial power have contributed to the prevalence of imperfect markets. In this unit, we will learn about pricing under imperfect competition and how prices are determined in imperfect markets. We will also explore related issues that influence business firms and consumers.
Sikkim Manipal University
Page No. 260
Managerial Economics
Unit 10
Case Let (Continued from Unit 9)
Ramesh made attempts to learn the pricing practices that were prevalent in the industry in which his firm operated. He learnt that, in most instances, firms fixed their product prices by considering the prices of competitors’ products and the costs incurred in producing and delivering the products. However, he could not understand why the same product, with a few
Unit 10
Unit 10
Pricing under Imperfect Competition
Structure:
10.1 Introduction
Case Let
Objectives
10.2 Monopoly
10.3 Price Discrimination under Monopoly
10.4 Bilateral Monopoly
10.5 Monopolistic Competition
10.6 Oligopoly
10.7 Collusive Oligopoly and Price Leadership
10.8 Duopoly
10.9 Industry Analysis
10.10 Summary
10.11 Glossary
10.12 Terminal Questions
10.13 Answers
10.14 Case Study
Reference/E-Reference
10.1 Introduction
In the previous unit, we studied about price determination under perfect competition. We learnt how prices are determined in markets that are perfectly competitive. We also learnt about the functions of markets and how individual firms are different from industry. Although the theory of perfectly competitive markets is well rounded and robust, such markets are seldom found in the real world. Most markets are imperfect due to the variations in market characteristics. Conditions of entry and exit are quite different across markets and consumers possess dissimilar levels of information. The strong emergence of brands, proprietary technologies, increasing influence of media, government regulations and relative concentration of financial power have contributed to the prevalence of imperfect markets. In this unit, we will learn about pricing under imperfect competition and how prices are determined in imperfect markets. We will also explore related issues that influence business firms and consumers.
Sikkim Manipal University
Page No. 260
Managerial Economics
Unit 10
Case Let (Continued from Unit 9)
Ramesh made attempts to learn the pricing practices that were prevalent in the industry in which his firm operated. He learnt that, in most instances, firms fixed their product prices by considering the prices of competitors’ products and the costs incurred in producing and delivering the products. However, he could not understand why the same product, with a few
References: Stonier, A.W. and Hague, D.C. (1980). A textbook of economic theory, 5th Ed, Longman, (1980). Sweezy, P. (1939). "Demand Under Conditions of Oligopoly" The Journal of Political Economy, Vol