Information is hidden due to noise traders trading randomly. This noise creates a balance where a sufficient amount of investors purchase costly information in order to make gains equal information collection costs. IRH also implies that the more informed investors there are, the more complete market prices will be and the smaller the gain will be for each investor trading on that knowledge. If there are very few informed investors, the gain will outweigh the cost of extracting that information. Likewise, if there are too many informed investors, the gain will not be sufficient enough to cover the cost of that information.
Another factor accounting for market imperfection is that households may buy out of ignorance because they may not have complete and accurate information about all goods and services that are available. Finally, firms may not be able to respond as quickly as desired to changes in market conditions. They may not be able to cut back on production immediately if demand falls, or enter into a new industry suddenly if demand rises. This slow respo... ... middle of paper ... ... such goods. It has been argued that the free market fails to allocate resources efficiently according t o what the people and society needs.
6. Discount pricing Cadbury is a competitive market which buyers should be able to obtain goods for less than the advertised price. Many firms can be forced into price-cutting if they are short of cash or need to increase sales quickly. 7. Different pricing Cadbury may change different prices sometimes for the same product at different times.
It is the situation when supplier sell the same product at different prices depends on the quantity purchased, not only it is inefficient but also anti competitive because the smaller companies may not receive the same prices as the bigger companies. It is also called quantity discount, it reduces consumer surplus and more common than 1st degree. 3RD DEGREE PRICE DISCRIMINATION: Third type of price discrimination is a commonest type means charging a price to different groups of consumers. The goods or services must not be transferable in this, the market is inefficient because of the dead weight loss in other words separation of market reduces dead weight loss and the separation of market enables the firm to increases profits. For examples: there are two segments of market students and alumni.
Third, a firm under intense cost or competitive pressures, which does not see IT as its core competence, may find outsourcing a way to delegate time-consuming, messy problems so it can focus scarce management time and energy on other differentiators. Next, several financial issues can make outsourcing appealing. One is the opportunity to liquidate the firm’s intangible IT asset, thus strengthening the balance sheet and avoiding a stream of sporadic capital investments in the future. Also, outsourcing can turn a largely fixed-cost business into one with variable costs. This is particularly important for firms whose activities vary widely in volume from one year to another or which face significant downsizing.
This might depend on several factors. - Customers with budget constraint may not view too many choices as favorable as they choose products base on lowest price. - Busy people with time constraints in shopping will prefer limited choices because too many choices will take too much time to choose a product. - The type of product is another factor as consumers tend to require fewer choices for commodity good and more choices for luxurious goods. - Personal preference is another factor as some people prefer variety of goods whereas others prefer not having too many choices at all.
And second, you might find that you will have more trouble selling it than if priced appropriately higher. If your website is priced too low, it will appear to most buyers that the deal must be too good to be true. And we all know what we have been told about that. So beware, low pricing may actually scare away otherwise interested buyers. Of course, it goes without saying that if the website is priced too high then there will be little or no interest on the part of serious buyers.
However, if the consumer is unable to find hot ticket items that should be displayed on the end caps, then Dollar Tree runs the risk of losing profits or sales because individuals are unable to locate their desired product and would rather pay the extra bit if money then spend more time looking on the shelves. The second, ‘S’ is structure. Structure is the “organization chart and accompanying baggage that shows who reports to whom and how both tasks are both divided and integrated” (Waterman, 1982). An accountability system is lacking within the organization’s structure. Somebody, somewhere, is not being held responsible for ensuring that the proper merchandise is on the right truck, heading to the right store.
Disadvantages: will be very difficult to determine what profit markup will be. Northern supplies mostly to outside companies and therefore will require additional resources in his division to price internal sales. The resources needed to work through the complexity of this system might not be justified by such a low volume. Two Step Pricing The standard VC is charged per unit sold then a periodic charge is made equal to the fixed costs associated with the facilities reserved for the buying unit. Since Thompson rarely sells to other divisions this might work because the facilities needed could easily be identified.
The lack of transparency on price and sales makes it more difficult to sustain collusion. If firms do not adhere to individual prices it is harder to detect deviation and punish it. Tacit collusion It is an illegal agreement thus the absence of a written agreement. When, firms that are competing do not want to engage in competitive behavior such as cutting the price, advertisements and promotion they come up with unwritten rules of collusive behavior such as: price leadership. A price leader then emerges setting a general industry price high enough that the least cost-efficient firm in the market may earn some return above the competitive level.