Chapter 13- Monopoly Menu Pricing Monopoly menu pricing Quantity-dependent prices(same product) e Suppose 2 types of consumers household, pH= 12-2qH business, Pb= 6-g B/2 Monopoly price decision for two markets MR(Q)=MC(Q,+ Q0)=MR(Qo=0 pH=6, gH=3 and pB=3, 9B=6 prot=3*6+63-0=36 Difficulty of implementing this pricing strategy price comparison, purchase in different market arbitrage, anti-trust law© Wen Cao 8 Monopoly menu pricing • Quantity-dependent prices (same product) • Suppose 2 types of consumers • ‘household’, pH = 12-2qH • ‘business’, PB = 6-qB/2 • Monopoly price decision for two markets: MRH(QH) = MC(QH + QB) = MRB(QB) = 0 pH = 6, qH = 3 and pB = 3, qB = 6 profit=3*6+6*3-0=36 • Difficulty of implementing this pricing strategy: price comparison, purchase in different market, arbitrage, anti-trust law Chapter 13 – Monopoly Menu Pricing