• Price Competition

• Marginal Cost
Pricing
• Advantages
• Disadvantages
• Short run decision
and Long-run decision
MARGINAL COST PRICING

A market structure where no single seller or single

buyer has power to determine the price and the
level of output on the market.

The buyers and the sellers have an equal

influence.
MARGINAL COST PRICING

The change in the total cost which it arises when

the quantity produced is incremented by one unit.

Usually used by utilities and public services.

MARGINAL COST PRICING
MARGINAL COST PRICING
 MARGINAL COST PRICING
SHORT RUN
DECISION
 Time horizon over which the scale
of an operation is fixed and only
available business decision is the
number of workers to employ
LONG RUN
DECISION
 Time horizon neeeded for a
producer to have flexibility over
all relevant prodution decisions. It
is necessary not only to change
the number of workers but also to
scale the size of factory up and
down and alter production
processes as desired.
 MARGINAL COST PRICING
SHORT RUN
DECISION
 Time horizon over which the scale
of an operation is fixed and only
available business decision is the
number of workers to employ
LONG RUN
DECISION
 Time horizon neeeded for a
producer to have flexibility over
all relevant prodution decisions. It
is necessary not only to change
the number of workers but also to
scale the size of factory up and
down and alter production
processes as desired.
• Monopolistic
Competition
• Product
Differentitation
and Advantages
• Disadvantages
• Factors of Product
Differentiation
• Types of Product
Differentiation
PRODUCT DIFFERENTIATION

Characterizes an industry n which many firms offer

products or services that are similar, but not
identical.

Firms try to differentiate their products in

order to achieve to capture above market
returns.
 PRODUCT DIFFERENTATION
ADVANTAGES
Creates
Value
PRODUCT
Defending DIFFERENTIATION
High Prices  strives to identify and
communicate the
Non-price unique benefits and
competition qualities of a product
compared to its
competitiors.
Brand
Perception Loyalty
of no close
substitutes
 PRODUCT DIFFERENTATION
DISADVANTAGES
Added
pressure on
the
manufacturers PRODUCT
DIFFERENTIATION
 strives to identify and
communicate the
Increase unique benefits and
prices qualities of a product
compared to its
competitiors.

Increased
Revenue not
guaranteed
 PRODUCT DIFFERENTATION

F
Form
C
Customize
F P L
Features Pricing Location
D B
Design Benefits

Q FACTORS OF
Quality
PRODUCT
DIFFERENTIATION
PRODUCT DIFFERENTATION

 Distinctions in
products that can
be evaluated in
terms of quality
where it is
possible to say one
good is better
than the other.  Based on
 Distinctions
in products numerous
that cannot be characteristics
evaluated in
terms of
quality
SUMMARIZATION
Short-run
Marginal and Long-
Cost run
Pricing Decision

Product Types of
Differentiation Product
Differentiation