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Monopoly Profit Maximization: Success and Economic Principles

Author

Listed:
  • Korbinian von Blanckenburg

    (Hochschule Ostwestfalen-Lippe, Germany)

  • Milena Neubert

    (Johannes Gutenberg-Universitaet Mainz, Germany)

Abstract

This paper presents a classroom experiment on pricing strategies available to monopolists. Each student makes production decisions as a monopolist during the experiment; learning from his/her own experiences what it means to be a price searcher. Full information is provided on cost conditions, while the demand function remains unknown to the participants. Given a sufficient number of periods, students will be able to maximise their profits only by applying a trial-and-error strategy. However, one of the objectives of the experiment is to demonstrate to students that search strategies based on economic principles are more efficient.

Suggested Citation

  • Korbinian von Blanckenburg & Milena Neubert, 2014. "Monopoly Profit Maximization: Success and Economic Principles," Working Papers 1406, Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz, revised 25 Nov 2014.
    • Handle: RePEc:jgu:wpaper:1406
    as

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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • A20 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - General
    • A23 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - Graduate
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

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