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Optimal pricing strategies for a cluster of goods: Own- and cross-price effects with correlated tastes


  • Rosas, Francisco
  • Acerenza, Santiago
  • Orazem, Peter


gent valuation methods are used to identify observed and unobserved preferences of goods and services. We apply these methods to compute willingness to pay (WTP) for a product conditional on having purchased another offered product. We provide a derivation for own-price and compensated cross-price elasticities whose results suggest a pricing strategy considering all offered goods simultaneously. Therefore, we solve the social planner’s problem maximizing a weighted function of producer’s revenues and consumer’s utility for the set of optimal prices. We show an application to collegiate sports, but these methods can be extended in a straightforward fashion to other goods.

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  • Rosas, Francisco & Acerenza, Santiago & Orazem, Peter, 2016. "Optimal pricing strategies for a cluster of goods: Own- and cross-price effects with correlated tastes," ISU General Staff Papers 201611300800001008, Iowa State University, Department of Economics.
  • Handle: RePEc:isu:genstf:201611300800001008

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