Use both mechanisms rather than just using one mechanism

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Question 1

a. In lectures we analysed pricing methods (such as two part pricing, third degree price discrimination, bundling etc) in isolation. However sometimes firms use pricing methods in combination. Provide an example of a good which is price using a combination of two pricing methods, apart from linear pricing, discussed in this unit. The example should not be one discussed elsewhere in this unit.

b. Use an economic argument to explain why, in your example in part a,it might be profitmaximising for the firm to use both mechanisms rather than just using one mechanism?

Reference no: EM131065787

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