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Mathematical Miscalculations and Monopoly Pricing Strategies


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  • Bryan C McCannon

    (Wake Forest University, Department of Economics, 123 Carswell Hall, Box 7505, Winston-Salem, NC 27109, USA.)


Economic models focus on prices that announce a cost for one unit. Often prices assigning a cost for multiple units are chosen. For either, any quantity can be purchased at a constant per unit price. I incorporate the experimental phenomenon of mathematical miscalculations to explain the use of both linear pricing strategies. When calculating the per unit price, an error may lead a consumer to either purchase mistakenly or not purchase a unit when she should. These two consequences distinguish the two. Furthermore, I show that announcing a price for multiple units, in certain environments, outperforms non-linear prices. Eastern Economic Journal (2009) 35, 248–262. doi:10.1057/eej.2008.18

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Bibliographic Info

Article provided by Palgrave Macmillan in its journal Eastern Economic Journal.

Volume (Year): 35 (2009 Spring)
Issue (Month): 2 ()
Pages: 248-263

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Handle: RePEc:pal:easeco:v:35:y:2009:i:2:p:248-263

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Postal: Palgrave Macmillan Journals, Subscription Department, Houndmills, Basingstoke, Hampshire RG21 6XS, UK

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