7Q1 7Q2 4
Itmakes an economic sense to indicate that odd pricing is valid. Thisis because the use of odd pricing has been indicated to increasesales. When making purchases, buyers have been indicated to look atthe price starting from the far left therefore, in case the price isapproximated to the nearest whole number, customers are tempted tomake purchase of a commodity or increase the number of commoditiespurchased by customers (Diana, 2012). For example, in case acommodity costs $20, a business may use odd pricing and price thecommodity at $19.7. This will make customers become compelled to buythe commodity or more of the commodity since it seems cheaper (Lewis,2013). Thus, odd pricing increases sales. Pricing strategies such asprice discrimination, odd pricing, two-part pricing, and cost-pluspricing have been deemed to be unethical, but it is key to note thatthese pricing strategies are not unethical. This is because the buyeras well as the seller has information concerning the difference inpricing (Nyandat, 2013). However, these pricing strategies may beunethical in case they violate price-fixing regulations, as well asanti-trust laws.
Inthe formation of a monopoly, a firm must be capable of producingproducts or services that do not have a close substitute (Thiel,2014). The optimal conditions for the development of a monopolyentail the existence of high barriers to entry into the market it isnot easy for other firms to sell the product or service provided by amonopoly.
Theformation of monopolies has been manipulated by the antitrust policyof the U.S. (Pasquale, 2013). The antitrust policy has beensuccessful in controlling the formation of monopolies since thegovernment is left with the power of limiting firms in any industryfrom exercising a lot of power. Prevention of monopoly formation issometimes beneficial because it helps customers to have a variety ofchoices to choose from. Besides, it prevents customers from payingoverpriced prices for a commodity (Stucke, 2013). Nevertheless,preventing the formation of a monopoly may not always be beneficialsince it may prevent development in society since firms havingmonopoly power to produce a vital commodity in society may not beobtain the authority to do so.
Diana,M.V. (2012). Marketing Issues in Assigning Odd Prices by the RomanianRetailers. Socialand Behavioral Sciences,Vol. 62, p 744 – 748.
Lewis,S.M. (2013). Odd Prices at Retail Gasoline Stations: focal PointPricing and Tacit Collusion. Forthcomingin the Journal of Economics and management Strategy,1-32.
Nyandat,C. (2013). What are Ethical Issues in Pricing? GAKSU,pg 1-2.
Pasquale,F. (2013). Paradoxes of Digital antitrust: Why the FTC Failed toExplain Its Inaction on Search Bias. HarvardJournal of Law & Technologyp. 1-21.
Stucke,E.M. (2013). Is Competition Always Good? Journalof Antitrust Enforcement,Vol. 1 (1) Pp. 162-197.
Thiel,P. (2014). Competition Is for Losers. TheWall Street Journal.