Discounting bestsellers Books differ from many other goods in that theyare marked with a list price at the pointof manufacture. Bookstores set prices not in absolute dollar terms, but rather in terms ofdiscounts fromlist prices. In common with other retailers, bookstoresengage in a varietyof pricing strategies, including loyalty programs, coupons, and clearance sales.Bookstores stand out from otherretailers in one aspect. They systematically charge lowerprices for their most popular items. Specifically, bookstores offer larger discounts on current bestsellers than titles not on the bestsellerlist. For example,Barnes & Nobles, #1conventional bookstore in the United States,offers a 40% discount on all titles on itsbestseller list, but no discount on most othertitles. (Excerpts from"The Competitivenessof On-line vis--vis Conventional Retailing: A Preliminary Study" By Ivan Png, 2000.)

a.Discuss the main considerationsfor pricing in a general setting.

b.Please explain why bookstores offer larger discounts on bestsellers than titles not on the best sellers list.