This paper proposes a textual analysis of Marshall’s theory of firm pricing behavior under competitive conditions. It considers to what extent average cost and marginal cost pricing rules characterize Marshall’s competitive partial equilibrium, and it shows that the two rules differ for origins and can be reconciled only with great difficulty in a general equilibrium framework.

The criterion for making good investments is to select projects for which the net benefits are positive, i.e., incremental benefits exceed incremental costs. The major analytic steps are: define alternatives, evaluate impacts, and select the project with highest net benefits. If pricing is determined independently of marginal cost, however, pricing is exogenous and the investment evaluation is ...

Customer behavior modeling has gained increasing attention in the context of dynamic pricing. As an important behavior phenomenon, consumer inertia refers to consumers’ inherent tendency of purchase procrastination and may induce consumers to wait even when immediate purchase is optimal from an objective perspective. This paper studies a dynamic pricing problem for a monopolist firm selling per...

Users share an increasing marginal cost technology. A method charges non negative cost shares covering costs. We look at the worst surplus (relative to the efficient surplus) in a Nash equilibrium of the demand game, where the minimum is taken over all convex preferences quasilinear in cost shares. We compare two budget-balanced methods, average cost pricing and serial cost sharing, and two met...

There are three separate strands of literature in economics that are related to the efficiency of takings under eminent domain: one addresses the question of optimal compensation for properties that are taken, the second inquires how governments might learn the values of properties that they consider taking, while the third analyzes solutions to the problem of land assembly. This essay reviews ...

Quantity discount pricing is a common practice used by business-to-business and business-toconsumer companies. A key characteristic of quantity discount pricing is that the marginal price declines with higher purchase quantities. In this paper, we propose a choice-based conjoint model for estimating consumer-level willingness-to-pay (WTP) for varying quantities of a product and for designing op...

It is known that the Bertrand outcome can be avoided when sellers are capacity constrained (Edgeworth 1897); when products are differentiated (d'Aspremont, Gabszewicz, and Thisse 1979); when the model is changed from one of short-run competition to long-run competition (Chamberlin 1929); when consumers are not perfectly informed or if it is costly for them to obtain information (Salop 1977). Ja...

Preface – By Todd Litman This is a seminal article concerning traffic accident cost analysis and vehicle insurance pricing reform by Professor William Vickrey, winner of the 1996 Nobel Prize for economics. It describes how to determine the marginal accident costs of vehicle travel, identifies several problems associated with current insurance pricing and compensation practices, and proposes inn...

The recent developments in information technology (IT) have enabled firms to employ personalized pricing. Should all firms employ personalized pricing even though the adaptation costs of such pricing strategies are not high? This paper theoretically demonstrates a situation in which all firms do not always employ personalized pricing even though the fixed costs to do so is zero. The model is ba...