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Pricing Strategy Under Monopoly Conditions: An Experiment For The Classroom

Author

Listed:
  • Nelson, Robert G.
  • Beil, Richard O., Jr.

Abstract

This classroom experiment allows students to explore pricing strategies available to the monopolist. Students are given full information about their costs but know nothing about demand except that it is simulated by the instructor. They submit their price-asked and quantity-offered records on one day and receive the quantity-sold response from the instructor on the next day, continuing this routine until they discover the profit-maximizing price and quantity. One of the objectives is to demonstrate that search strategies based on economic principles (MC=MR) can be more efficient than trial-and-error.

Suggested Citation

  • Nelson, Robert G. & Beil, Richard O., Jr., 1994. "Pricing Strategy Under Monopoly Conditions: An Experiment For The Classroom," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 26(1), pages 1-12, July.
    • Handle: RePEc:ags:joaaec:15420
    DOI: 10.22004/ag.econ.15420
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    File URL: https://ageconsearch.umn.edu/record/15420/files/26010287.pdf
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    References listed on IDEAS

    as
    1. Plott, Charles R., 1989. "An updated review of industrial organization: Applications of experimental methods," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 19, pages 1109-1176, Elsevier.
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    Cited by:

    1. Nelson, Robert G. & Wilson, Norbert L.W., 2008. "Evaluating Teaching Methods: Is It Worth Doing Right?," 2008 Annual Meeting, February 2-6, 2008, Dallas, Texas 6810, Southern Agricultural Economics Association.
    2. 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.
    3. Nelson, Robert G., 1995. "Application of Experimental Economics to Problems in Commodity Promotion," New Methodologies for Commodity Promotion Economics, October 5-6, 1995, Sacramento, California 279628, Regional Research Projects > NECC-63: Research Committee on Commodity Promotion.

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