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Author: | Hanson, W. Kalyanam, K. |
Title: | A cost-plus trap: pricing heurestics and demand identification |
Journal: | Marketing Letters
1994 : JUL, VOL. 5:3, p. 199-209 |
Index terms: | MARKETING PRICING HEURISTIC METHODS |
Language: | eng |
Abstract: | Cost plus pricing is a common pricing heuristic. The authors investigate whether a firm, following cost plus pricing in a simple environment, will eventually have enough information about demand conditions to switch to an optimization-based pricing approach. The authors also find that with unsophisticated statistical approaches this is unlikely, and even with a Bayesian decision theoretic approach there can be what we call a "cost plus trap". |
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