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Profit maximization and marketing strategies: Demand rotation and social influences
Author(s) -
Aislabie C. J.,
Tisdell C. A.
Publication year - 1988
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.4090090110
Subject(s) - bandwagon effect , profit maximization , economics , demand curve , microeconomics , profit (economics) , maximization , consumer demand , product (mathematics) , mathematical economics , econometrics , mathematics , geometry , political science , law
Microeconomic texts discuss alterations in industry demand curves as movements to higher or lower levels. Consider, instead, the implications for a monopolist's profit of rotating its (linear) demand curve. Where this can be done without cost by pivoting at the current price it will be profitable to continue to pivot the curve until it is horizontal or vertical. The possibility of rotating the demand curve of a ‘new’ product on an arbitrarily selected price allows us to consider the optimality of different advertising strategies (‘bandwagon’ or 'snob').