Multi‐unit pricing | Zendy

McCan Bryan C. | Zendy

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Multi‐unit pricing

Author(s) -

McCan Bryan C.

Publication year - 2009

Publication title -

managerial and decision economics

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.288

H-Index - 51

eISSN - 1099-1468

pISSN - 0143-6570

DOI - 10.1002/mde.1449

Subject(s) - unit (ring theory) , marginal cost , unit price , economics , homogeneous , microeconomics , division (mathematics) , average cost pricing , unit cost , pricing schedule , econometrics , rational pricing , mathematics , capital asset pricing model , mathematics education , arithmetic , combinatorics

A price takes the form of a cost for either one unit (single‐unit pricing) or multiple units (multi‐unit pricing). I consider a monopolist selling units of a good to a population of homogeneous consumers to explain why one is preferred to the other. A mental cost arises if the division problem a multi‐unit price causes is done. If marginal utility remains high multiple units are desired. Multi‐unit pricing is preferred since it creates a cost if fewer units are purchased. If utility exhibits strong diminishing returns single‐unit pricing is used to avoid the calculation. Copyright © 2008 John Wiley & Sons, Ltd.

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