Pricing Behavior in regards to pricing strategies and pricing discrimination among monopolies: a. Why does BP offer
Question:
Pricing Behavior in regards to pricing strategies and pricing discrimination among monopolies:
a. Why does BP offer discounts on gasoline if customers join their loyalty program? Briefly explain. What type of price discrimination is this an example of?
b. Most fast food restaurants offer "value" meals which include a drink, sandwich and fries for a price that is about the same as purchasing two of those three separately. Briefly explain why this is done. What type of pricing strategy is present here?
c. Suppose an electric utility has a new technology that can determine exactly how much each customer is willing to pay for their electricity and proposed to a regulator that it be able to charge those prices. What would happen to the total surplus under these conditions relative to the utility charging a single price? Do you think the regulator would approve such a pricing program? Why or why not?
d. There are several shopping aggregators that offer consumers discounts if they use their web site to access sellers (e.g., Ebates, Extrabux, Retailmenot, etc.). Why would sellers agree to provide discounts to users of these websites? Briefly explain. How does this relate to economics and pricing beahviors?