(10%) a. a. A Jean manufacturer would find it profitable to charge higher prices
ID: 1111032 • Letter: #
Question
(10%) a. a. A Jean manufacturer would find it profitable to charge higher prices in Europe th Q8 an in the United States if it could prevent resale between the two countries. hat techniques can it use to discourage resale? (Hint: See the Mini-Case, "Disneyland Pricing.") b. As described in the Mini-Case, "Google Uses Bidding for Ads to Price Discriminate," Google uses auctions to charge advertisers according to how much they are willing to pay to reach a target audience. What type of price discrimination is this?Explanation / Answer
Answer:- In this case, the best strategy which could be adopted by the jean manufacturer is to sale the product in the USA at such a lower price that the seller of the USA do not find it profitable to sale the jean due to low profit margin. Such a strategy was also adopted by Disney where it sold the ticket lower than the local competitors and thus the competitor could not compete with Disney.
Answer:- This phenomenon can be characterized as perfect price discrimination or the first degree price discrimination as the bidding allows the customers to pay the maximum price which they are willing to pay for a certain service or product.
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