Problems in Pricing

3 Pages Posted: 16 Jun 2009

See all articles by Paul Farris

Paul Farris

University of Virginia - Darden School of Business

Phillip E. Pfeifer

University of Virginia - Darden School of Business

Abstract

Five carefully constructed problems illustrate the concepts of second-market discounting, price skimming, limit pricing, random discounting, premium pricing, and bundling.

Excerpt

UVA-M-0456

Rev. Jul. 27, 2011

PROBLEMS IN PRICING

1. Interstate Roofing

Interstate Roofing sells roof shingles and supplies. Historically, its market has been in Florida, but a hurricane in the Caribbean presented Interstate with an opportunity to add some of the larger islands to its selling area. The two markets have demands estimated as follows:

Caribbean QUANTITY (square yards) = 550,000 − 10,000(PRICE/square yard)

Florida QUANTITY (square yards) = 540,000 − 20,000(PRICE/square yard)

Table 1. Demand functions.

. . .

Keywords: price discrimination second-market discounting, price skimming, limit pricing, random discounting, premium pricing, and bundling

Suggested Citation

Farris, Paul and Pfeifer, Phillip E., Problems in Pricing. Darden Case No. UVA-M-0456. Available at SSRN: https://ssrn.com/abstract=1420546

Paul Farris (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-0524 (Phone)

HOME PAGE: http://www.darden.virginia.edu/faculty/farris.htm

Phillip E. Pfeifer

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4803 (Phone)

HOME PAGE: http://www.darden.virginia.edu/faculty/Pfeifer.htm

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