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Multi-unit pricing

  • Bryan C. McCannon

    (Wake Forest University, Winston-Salem, NC, USA)

A price takes the form of a cost for either one unit (single-unit pricing) or multiple units (multi-unit pricing). I consider a monopolist selling units of a good to a population of homogeneous consumers to explain why one is preferred to the other. A mental cost arises if the division problem a multi-unit price causes is done. If marginal utility remains high multiple units are desired. Multi-unit pricing is preferred since it creates a cost if fewer units are purchased. If utility exhibits strong diminishing returns single-unit pricing is used to avoid the calculation. Copyright © 2008 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/mde.1449
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Article provided by John Wiley & Sons, Ltd. in its journal Managerial and Decision Economics.

Volume (Year): 30 (2009)
Issue (Month): 2 ()
Pages: 135-140

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Handle: RePEc:wly:mgtdec:v:30:y:2009:i:2:p:135-140
Contact details of provider: Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/7976

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  1. Russell, Thomas & Thaler, Richard, 1985. "The Relevance of Quasi Rationality in Competitive Markets," American Economic Review, American Economic Association, vol. 75(5), pages 1071-82, December.
  2. Basu, Kaushik, 2004. "Consumer Cognition and Pricing in the 9's in Oligopolistic Markets," Working Papers 04-04, Cornell University, Center for Analytic Economics.
  3. Conlisk, John, 1988. "Optimization cost," Journal of Economic Behavior & Organization, Elsevier, vol. 9(3), pages 213-228, April.
  4. John Conlisk, 1996. "Why Bounded Rationality?," Journal of Economic Literature, American Economic Association, vol. 34(2), pages 669-700, June.
  5. Basu, Kaushik, 1997. "Why are so many goods priced to end in nine? And why this practice hurts the producers," Economics Letters, Elsevier, vol. 54(1), pages 41-44, January.
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