Companies often run into trouble when they offer a service at a zero price. Not always, of course. Many all-you-can-eat buffets continue to thrive even though the marginal cost of the next chicken nugget is zero. And many content providers manage to stay in business by selling radio, TV, or display ads against the free [...]
Posts Tagged ‘Pricing’
Why Free is a Bad Price, American Airlines Edition
Posted in Business, Microeconomics, tagged Adverse Selection, Airlines, Microeconomics, Moral Hazard, Pricing on May 7, 2012 | 1 Comment »
Will New Technology Help People Escape the “Sports Tax”?
Posted in Microeconomics, Technology, tagged Microeconomics, Pricing, Sports, Television on December 16, 2011 | 2 Comments »
Today’s exercise in everyday economics: Brian Stelter and Amy Chozick making the case that cable and satellite TV subscribers are paying a “sports tax” (ht: Jennifer R.). Writing in the New York Times, they say: Although “sports” never shows up as a line item on a cable or satellite bill, American television subscribers pay, on average, about [...]
Why Are Restaurant Dinners Pricier Than Lunch?
Posted in Microeconomics, tagged Microeconomics, Pricing on December 15, 2011 | 5 Comments »
Over at Quora, restaurateur Jonas M. Luster explains why he charges more for items at dinner than at lunch: Lunch isn’t prepared and served by my A-team. Many times waiters and cooks have to prove themselves during lunch before being allowed on the dinner line. This means I pay less in payroll. Lunch doesn’t usually serve [...]
Cuddle in Coach, But Don’t Get Too Comfortable
Posted in Business, Microeconomics, tagged Airlines, Microeconomics, Pricing on December 9, 2011 | 1 Comment »
Yesterday’s Wall Street Journal had a fun article about Air New Zealand’s latest innovation: Cuddle Class. As “the Middle Seat” columnist Scott McCartney describes it: Steve Metz of Houston cuddled up with his wife Jackie and slept as they flew to New Zealand on a small futon. This flying couch wasn’t in a private jet [...]
Congestion Pricing Saves Time and Money
Posted in Budget, Energy, Environment, Microeconomics, tagged CBO, Infrastructure, Pricing, Taxes, Transportation on May 18, 2011 | 4 Comments »
The Highway Trust Fund will soon be broke. Gasoline tax revenues haven’t kept up with spending, and it’s likely that demands for new highway infrastructure will grow in the future. Joseph Kile, head of the microeconomics studies division at the Congressional Budget Office, discussed various policy options to deal with this funding gap in his testimony [...]
Why Free Is a Bad Price
Posted in Internet, Microeconomics, Technology, tagged Apple, Instapaper, Internet, Pricing on April 29, 2011 | 5 Comments »
Marco Arment is the brains behind one of my favorite apps. Instapaper allows you to store articles off the Web for later reading; very useful, for example, when I am surfing and come across an article I want to share with my students or use in a future blog post. And the editor of Instapaper periodically shares excellent reads that I might [...]
The Chevy Volt Premium
Posted in Microeconomics, tagged Auto, Electric Car, GM, Microeconomics, Pricing on August 5, 2010 | 4 Comments »
The other day I noted that Amazon has been tussling with book publishers over the pricing of electronic books. Amazon would prefer a wholesale pricing model, in which it sets retail prices, rather than an agency pricing model, in which the publishers set the prices. One reason that Amazon would prefer the wholesale model is because it [...]
Three A’s of E-Book Pricing: Amazon, Apple, and Antitrust
Posted in Internet, Microeconomics, tagged Amazon, Antitrust, Apple, Internet, Microeconomics, Pricing on August 3, 2010 | 7 Comments »
A few months ago, I noted that Amazon and book publishers were tussling over the pricing of electronic books. Amazon had originally acquired e-books using a wholesale pricing model. It paid publishers a fixed price for each e-book it sold, and then decided what retail price to charge customers. Retailers usually sell products at a mark-up above the wholesale [...]
Web Coupons, Privacy, and Price Discrimination
Posted in Internet, Microeconomics, tagged Internet, Microeconomics, Pricing, Privacy on April 17, 2010 | 6 Comments »
Suppose you’ve got a successful business, selling your product to a diverse set of customers. Life is good. But you’d like to increase profits even more. What should you do? One option from the MBA playbook (among many) is to think creatively about your pricing. Maybe there’s a way to distinguish your customers from each [...]
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