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Market Structure And pricing theory

Market Structure And pricing theory

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Published by diivya1987

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Published by: diivya1987 on Apr 27, 2010
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1
MS-9
Managerial Economics
Indira GandhiNational Open UniversitySchool of Management StudiesBlock 
4
PRICING DECISIONS
UNIT 11Market Structure and Barriers to Entry5UNIT 12Pricing Under Pure Competition and Pure Monopoly24UNIT 13Pricing under Monopolistic and Oligopolistic Competition38UNIT 14Pricing Strategies53
 
Pricing Decisions
2
PRINT PRODUCTION
Mr. A S. ChhatwalMr. Tilak RajMs. Sumathy NairAsstt. Registrar (Publication), Sr. ScaleSection Officer (Publication)Proof ReaderSOMS, IGNOUSOMS, IGNOUSOMS, IGNOU
Course Design Committee and Preparation Team
Prof. V.L. Mote (Retd.)Dr. C.G. NaiduIIM, AhmedabadPlanning & Development DivisionIGNOU, New DelhiProf. G.S. GuptaProf. B.B. KhannaIIM, AhmedabadDirectorSchool of Management StudiesIGNOU, New DelhiProf. Arindam BanikDr. Neeti AgrawalIMI, New DelhiSchool of Management StudiesIGNOU, New DelhiProf. AtmanandDr. G. SubbayammaMDI, Gurgaon
Course Coordinator and Editor 
School of Management StudiesIGNOU, New DelhiProf. Rajat Kathuria
Course Editor 
IMI, New DelhiDecember, 2003
© Indira Gandhi National Open University, 2003
ISBN- 81-266-0973-7
 All rights reserved. No part of this work may be reproduced in any form, by mimeograph or any other means, without permission in writing from the Indira Gandhi National Open University.Further information about the Indira Gandhi National Open University courses may be obtained fromthe University’s Office at Maidan Garhi, New Delhi-110 068.
Printed and published on behalf of the Indira Gandhi National Open University, New Delhi,by Director, School of Management Studies.Cover designed by H D Computers, Inderpuri, New Delhi.Lasertypeset by ICON Printographics, B-107 Fateh Nagar, New Delhi-110 018Printed at Berry Art Press, A-9, Mayapuri Industrial Area, Phase-1, New Delhi-64Paper used : Agrobased Environment Friendly.
 
3
BLOCK 4 PRICING DECISIONS
Block 4
introduces the different market structures and their implications for pricingbehaviour of firms. In
unit 11,
market structure and the significant concept of entry barriers is discussed. It examines the reasons why certain entry barriers are‘natural’ i.e. determined by the nature of the industry and why certain entrybarriers are created by managers themselves in order to maximize current or evenlong-term profitability.
Unit 12
dwells on the extreme types of markets structuresi.e. perfect competition and monopoly and rationalizes them as benchmarks. Theoutcomes achieved under these markets are used to compare outcomes achieved inother markets that lie in between these two market structures. Although boththese structures are difficult to find in practice, they are useful from the publicpolicy point of view.
Unit 13
examines monopolistic competition and oligopoly andbriefly introduces the tools of game theory. This is done in an extremelyelementary manner, so as not to detract from the main focus of the unit. Theconcept of market concentration and its measurement is also discussed. Finally
unit 14
explores the various methods of pricing followed in different kinds of markets introduced in the previous units. It explains the concept of pricediscrimination and its nuances and argues that to engage in price discrimination, thefirm must have some control over price. Other interesting pricing techniques viz.bundling, peak load pricing, two part and multipart pricing along with a number of examples are developed.

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