Thwart shoppers who abuse store return policies

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1. Staples and The Limited have attempted to thwart shoppers who abuse store return policies. When a customer returns items, store clerks swipe the customer’s driver’s license through electronic card readers that track buying and return patterns for any suspicious activity.Liz Pulliam Weston, “The Basics: Are You a Bad Customer?” MSN Money. What drawbacks do you think such a strategy could have?

2. A manufacturer is deciding for a specific product whether to set up a direct sales channel through an online shop, or to deliver to a retailer. The product under consideration has a yearly demand function equal to q = 10,000 – 20p and the marginal (or variable) per unit cost are $200. If setting up their own direct sales channel would cost them $200,000 per year, is it worth it? In other words, does avoiding double marginalization result in (at least) $200,000 profit more?

Reference no: EM132301270

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