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Pricing Strategy Under Monopoly Conditions: An Experiment For The Classroom

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Author Info

  • Nelson, Robert G.
  • Beil, Richard O., Jr.

Abstract

This classroom experiment allows students to explore pricing strategies available to the monopolist. Students are given full information about their costs but know nothing about demand except that it is simulated by the instructor. They submit their price-asked and quantity-offered records on one day and receive the quantity-sold response from the instructor on the next day, continuing this routine until they discover the profit-maximizing price and quantity. One of the objectives is to demonstrate that search strategies based on economic principles (MC=MR) can be more efficient than trial-and-error.

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File URL: http://purl.umn.edu/15420
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Bibliographic Info

Article provided by Southern Agricultural Economics Association in its journal Journal of Agricultural and Applied Economics.

Volume (Year): 26 (1994)
Issue (Month): 01 (July)
Pages:

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Handle: RePEc:ags:joaaec:15420

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Web page: http://www.saea.org/jaae/jaae.htm
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Related research

Keywords: Experimental economics; Games; Monopolistic; Teaching; Demand and Price Analysis; Teaching/Communication/Extension/Profession;

References

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  1. Plott, Charles R., 1989. "An updated review of industrial organization: Applications of experimental methods," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 19, pages 1109-1176 Elsevier.
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Citations

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Cited by:
  1. Cheung, Stephen L., 2003. "On the Use of Classroom Experiments in 'Aligned' Teaching," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, vol. 33(1), pages 61-72, March.
  2. Nelson, Robert G. & Wilson, Norbert L.W., 2008. "Evaluating Teaching Methods: Is It Worth Doing Right?," 2008 Annual Meeting, February 2-6, 2008, Dallas, Texas 6810, Southern Agricultural Economics Association.
  3. Korbinian von Blanckenburg & Milena Neubert, 2014. "Monopoly Profit Maximization: Success and Economic Principles," Working Papers 1406, Gutenberg School of Management and Economics, Johannes Gutenberg-Universit├Ąt Mainz, revised 16 May 2014.

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