IDEAS home Printed from https://ideas.repec.org/p/jgu/wpaper/1406.html
   My bibliography  Save this paper

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

    Download full text from publisher

    File URL: https://download.uni-mainz.de/RePEc/pdf/Discussion_Paper_1406.pdf
    File Function: First version, 2014
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Robert J. Oxoby, 2001. "A Monopoly Classroom Experiment," The Journal of Economic Education, Taylor & Francis Journals, vol. 32(2), pages 160-168, January.
    2. Elie Appelbaum & Chin Lim, 1982. "Monopoly versus Competition under Uncertainty," Canadian Journal of Economics, Canadian Economics Association, vol. 15(2), pages 355-363, May.
    3. Chee-Yee Chong & David Cheng, 1975. "Multistage Pricing under Uncertain Demand," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 4, number 2, pages 311-323, National Bureau of Economic Research, Inc.
    4. Nelson, Robert G. & Beil, Richard O., 1994. "Pricing Strategy Under Monopoly Conditions: An Experiment for the Classroom," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 26(1), pages 287-298, July.
    5. Volker Nocke & Martin Peitz, 2003. "Monopoly Pricing under Demand Uncertainty: Final Sales versus Introductory ffers," PIER Working Paper Archive 03-002, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    6. Ivo Bischoff & Björn Frank, 2011. "Good news for experimenters: Subjects are hard to influence by instructorsʹ cues," Economics Bulletin, AccessEcon, vol. 31(4), pages 3221-3225.
    7. 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.
    8. Mark Dickie, 2006. "Do Classroom Experiments Increase Learning in Introductory Microeconomics?," The Journal of Economic Education, Taylor & Francis Journals, vol. 37(3), pages 267-288, July.
    9. Till Requate & Israel Waichman, 2011. "“A profit table or a profit calculator?” A note on the design of Cournot oligopoly experiments," Experimental Economics, Springer;Economic Science Association, vol. 14(1), pages 36-46, March.
    10. Daniel Zizzo, 2010. "Experimenter demand effects in economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 13(1), pages 75-98, March.
    11. Yvonne Durham & Thomas Mckinnon & Craig Schulman, 2007. "Classroom Experiments: Not Just Fun And Games," Economic Inquiry, Western Economic Association International, vol. 45(1), pages 162-178, January.
    12. Meyer, Robert A, 1975. "Monopoly Pricing and Capacity Choice under Uncertainty," American Economic Review, American Economic Association, vol. 65(3), pages 326-337, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zizzo, Daniel John, 2013. "Claims and confounds in economic experiments," Journal of Economic Behavior & Organization, Elsevier, vol. 93(C), pages 186-195.
    2. Piers Fleming & Daniel Zizzo, 2015. "A simple stress test of experimenter demand effects," Theory and Decision, Springer, vol. 78(2), pages 219-231, February.
    3. Jonathan Guest, 2015. "Reflections on ten years of using economics games and experiments in teaching," Cogent Economics & Finance, Taylor & Francis Journals, vol. 3(1), pages 1115619-111, December.
    4. Gerald Eisenkopf & Pascal A. Sulser, 2016. "Randomized controlled trial of teaching methods: Do classroom experiments improve economic education in high schools?," The Journal of Economic Education, Taylor & Francis Journals, vol. 47(3), pages 211-225, July.
    5. Tisha Emerson & Denise Hazlett, 2011. "Classroom Experiments," Chapters, in: Gail M. Hoyt & KimMarie McGoldrick (ed.), International Handbook on Teaching and Learning Economics, chapter 7, Edward Elgar Publishing.
    6. 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.
    7. Axel Sonntag & Daniel John Zizzo, 2015. "Institutional authority and collusion," Southern Economic Journal, John Wiley & Sons, vol. 82(1), pages 13-37, July.
    8. Sam Allgood & William B. Walstad & John J. Siegfried, 2015. "Research on Teaching Economics to Undergraduates," Journal of Economic Literature, American Economic Association, vol. 53(2), pages 285-325, June.
    9. Hart Hodges & Yvonne Durham & Steve Henson, 2018. "Economic Education Production Functions for the Principles of Macroeconomics and the Principles of Microeconomics: Is There a Difference?," Journal for Economic Educators, Middle Tennessee State University, Business and Economic Research Center, vol. 18(2), pages 22-41, Fall.
    10. McMahon, Michael, 2011. "Classroom Games in Economics: A Quantitative Assessment of the ‘Beer Game’," Economic Research Papers 270760, University of Warwick - Department of Economics.
    11. Marcus Giamattei & Humberto Llavador, 2017. "Teaching microeconomic principles with smartphones – lessons from classroom experiments with classEx," Working Papers 996, Barcelona School of Economics.
    12. Hilde Patron & William J. Smith, 2016. "The Short-Term and Long-Term Trade-Offs of Sustainable Entrepreneurship," Journal for Economic Educators, Middle Tennessee State University, Business and Economic Research Center, vol. 16(1), pages 36-48, Fall.
    13. Stefan Ruediger & Tatiana Batova, 2020. "The Candy Price Index and the Gumball Domestic Product," Journal of Economics Teaching, Journal of Economics Teaching, vol. 5(1), pages 1-16, May.
    14. Lin, Yu-Hsuan, 2021. "A classroom experiment on the specific factors model," International Review of Economics Education, Elsevier, vol. 37(C).
    15. Farolfi, Stefano & Erdlenbruch, Katrin, 2020. "A classroom experimental game to improve the understanding of asymmetric common-pool resource dilemmas in irrigation water management," International Review of Economics Education, Elsevier, vol. 35(C).
    16. Tisha L. N. Emerson & Linda English, 2016. "Classroom Experiments: Is More More?," American Economic Review, American Economic Association, vol. 106(5), pages 363-367, May.
    17. Beth A. Freeborn & Jason P. Hulbert, 2011. "Persuasive and Informative Advertising: A Classroom Experiment," The Journal of Economic Education, Taylor & Francis Journals, vol. 42(1), pages 51-59, January.
    18. Steven B. Caudill & Franklin G. Mixon, 2023. "Guess for Success? Application of a Mixture Model to Test-Wiseness on Multiple-Choice Exams," Stats, MDPI, vol. 6(3), pages 1-6, June.
    19. Morgan, Stephen N. & Sharp, Misti D. & Grogan, Kelly A., 2020. "So You Want to Run a Classroom Experiment Online? The Good, the Bad, and the Different," Applied Economics Teaching Resources (AETR), Agricultural and Applied Economics Association, vol. 2(5), December.
    20. Mateu, Guillermo, 2021. "Innovative education management: an empirical study," TEC Empresarial, School of Business, Costa Rica Institute of Technology (ITCR), vol. 15(3), pages 2-17.

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jgu:wpaper:1406. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Research Unit IPP (email available below). General contact details of provider: https://edirc.repec.org/data/vlmaide.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.