Discuss the Main Factors Affecting Product Pricing in the Uk

The determination of prices of commodities depends upon the type of market structure in which they are produced. There are various markets prevailing in an economy like (a) perfect competition, (b)Monopoly,(c) Monopolistic Competition, and (d) Oligopoly. Monopoly, monopolistic competition and oligopoly are generally grouped under imperfect competition, since these three markets differ in respect to the degree of imperfections in the market.

Price: Pricing decisions should take into account profit margins and probable pricing response of competitors.

1) An Oligopolistic market structure is a structure where very few large businesses sell a particular standard Good or differentiated Good, and to whose market entry proves difficult. This in turn, gives little control over product pricing because of mutual interdependence (with the exception of collusion among businesses) creating a non-price competition meaning they are the ‘price setters’. A good rule to help classify an

Over the years, firms have increasingly been maximising shareholder value. However, Steve Denning, a former director of the World Bank, author of six leadership and management books and columnist for Forbes, disagrees. His article “The Origin of the ‘World’s Dumbest Idea’: Milton Friedman”, was published on June 26, 2013 on Forbes, debates against Friedman’s argument that the social responsibility of corporations is to make money for its shareholders. The main issue here is whether the maximisation of shareholder value as the guiding principle of executives is detrimental to the corporation. Although Denning has exhibited valid points in his argument, his lack of citation, biased view on most arguments and his tone has dampened the credibility

This is also linked into the behaviour of the buyers in the market. Buyers are also price takers because they can purchase as much as they wish without influencing the market price. The final assumption is important when considering the long term equilibrium price of a firm in perfect competition. This assumption is that entry into the market is free and that there are no barriers to entry. Any costs incurred are incurred by all of the suppliers; an entrant will pay no additional cost for entering the firm.

This paper will provide insight into pricing strategies to reduce price elasticity, the effects of government policy, the importance of government involvement in the market economy. It will further go on to explain the complexity associated with expansion and the creative ways to converge interests of the managers and stockholders.

Competition within the industry as well as market supply and demand conditions set the price of products sold.

There is a concept in Kierkegaardian existentialism that is quite interesting, particularly because in the current case it appears to be relevant for a very bizarre reason. Kierkegaard writes of the “teleological suspension of the ethical,” that is, the suspension of ethical rules for behavior in order to follow a higher, divinely-imposed law (McDonald, 1996). The example that Kierkegaard writes of is Abraham’s willingness to sacrifice his son, Isaac, a willingness that required that he suspend his ethical obligations in support of the telos provided by God. Milton Friedman certainly does not come across as a Christian Existentialist, so one wonders precisely how this concept is relevant to his thoughts on the duties of corporations. The answer is quite simple: for Friedman, the “divine law” that warrants a teleological suspension of the ethical is the accumulation of wealth. In order to accumulate wealth, the ethical obligations of all persons involved in a corporation can be suspended under the pretense that they together form a corporation that is and ought to be amoral and profit-hungry. I am being somewhat tongue-in-cheek, of course, because I doubt that Friedman would describe his position in these terms, but I am pointing to what I believe is a key reason that Friedman’s argument fails. In this short paper, I will first present what I believe are Friedman’s most fundamental arguments. I will then present my reasons that these arguments fail. Finally, I will discuss

Can business thrive by profit alone? Barry (2000) described Milton Friedman’s short essay, in the 1970’s, as extremely controversial, in which he denied that corporate executives had any moral duty to relax the conditions of profit maximization on behalf of the wider interests of society. This example of the “bottom line” of business has been demonstrated within the past couple of decades by publicly criticized companies, for fraudulent activities, such as, Enron, WorldCom, and HealthSouth along with many others. These company executives were willing to sacrifice the vast majority and greater good of society for profit gains. This mindset left many of loyal investors, consumers and employees without a sound stabilized future. There are also many businesses that produce a high yield on their investments;

pricing closely, as being out of step with the market can cause dramatic market share changes in a

Competition within the industry as well as market supply and demand conditions set the price of products sold.

Friedman argues that the only responsibility a business has to society is to act in its own self-interest to create revenue and remain successful in the economic system (158).Created to make a profit by providing a task or service, a business must “use its resources and engage in activities designed to increase its profits” (Friedman 164). A business could use any tactic to gain a profit as long as they remained “within the rules of the game” (Friedman 164). The rules implied that no deception or fraud could take place while the corporation obtained their profit.

Price discrimination can be defined as when the same good or service is sold at different prices to different consumers. If we look at this definition of price discrimination, for an example, we can show that price discrimination can be seen in the entrance tickets of parks such as Universal studios; this is due to the fact that there are discounts for children and senior citizens. (Phlips L. , 1983) However, this can be seen as not being discriminative at all due to the fact that if the price difference full reflects the difference in the cost of carrying the good from the seller’s location to the buyers’ location.

This chapter sets out the rationale for price discrimination and discusses the two major forms of price discrimination. It then considers the welfare effects and antitrust implications of price discrimination.

b) In a monopolistic competition structure, although there are numerous firms, they carry different products. Due to product differentiation, each company is able to somewhat control their own pricing.