ECO Weeks 5 & 6

Discussion 5

For this discussion, use the following hypothetical scenario as the basis for your response:

Your business partner is strongly opposed to your proposal to charge your largest customers lower prices for your web-based services than what you charge your smaller customers. She is arguing it is unethical, unfair, and possibly illegal.


Address the following in your discussion post:


Make a case that both groups of customers will be satisfied with the deal and that this is a perfectly legal form of pricing in a business-to-customer relationship.


. What degree is this type of price discrimination?

. How will the plan increase revenue?

. Why will both groups of customers be satisfied with the deal?

. Why is this a legal form of pricing?



Discussion 6


We consider a sequential-move game in which an entrant is considering entering an industry in competition with an incumbent firm. There are several possibilities of how this sequential game will be played. We want to use the Froeb rule of “look ahead and reason back.”



· Play and analyze the game. Can, and how does, the entrant succeed? Is the incumbent ever in control of this game? What is the Nash equilibrium?

. You may wish to review the old game known as Duopoly, as well as Antoine-Augustin Cournot, to help inform your post.

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