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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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  • Bryan C. McCannon, 2009. "Multi-unit pricing," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 30(2), pages 135-140.
  • Handle: RePEc:wly:mgtdec:v:30:y:2009:i:2:p:135-140 DOI: 10.1002/mde.1449

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    References listed on IDEAS

    1. Russell, Thomas & Thaler, Richard, 1985. "The Relevance of Quasi Rationality in Competitive Markets," American Economic Review, American Economic Association, vol. 75(5), pages 1071-1082, December.
    2. John Conlisk, 1996. "Why Bounded Rationality?," Journal of Economic Literature, American Economic Association, vol. 34(2), pages 669-700, June.
    3. Kaushik Basu, 2004. "Consumer Cognition and Pricing in the 9's in Oligopolistic Markets," Harvard Institute of Economic Research Working Papers 2053, Harvard - Institute of Economic Research.
    4. 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.
    5. Conlisk, John, 1988. "Optimization cost," Journal of Economic Behavior & Organization, Elsevier, vol. 9(3), pages 213-228, April.
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