Analysis Of The Article ' Disney Discovers Peak Pricing '

1493 WordsApr 18, 20166 Pages
When thinking about going to an amusement park, certain companies come to mind such as Disney and Universal. This is because these companies are one of the biggest firms when it comes to amusement parks, with Disney being the biggest. In this paper I will assess the economic factors that come into effect from the article “Disney Discovers Peak Pricing” by S.K London. I will also refute the claim made in the article that Disney’s new pricing mechanism, surge pricing, is not a great strategy to pursue and I will justify that it does seem sensible to implement such a mechanism for an oligopolistic structure which Disney is a part of. The article states that Disney has implemented a new pricing mechanism which they call surge pricing. Surge pricing occurs when a company or firm raises the price of its offering if there is an increase in demand and lowers them when there is a decrease in demand. Why is surge pricing important? It is important because consumers dislike the concept and it goes against a competitive market. This in turn acts as a characteristic of an oligopoly. I plan to analyze and refute the claim made in the article as well as claim that Disney is making the right decision by focusing on three main economic concepts: oligopolies, supply and demand, and elasticity. The first reason why Disney’s new pricing mechanism is surge pricing and is not price discrimination is because it is merely following the characteristics and behaviors that are involved in an

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