Document Type
Article
Publication Date
1971
Publisher
Graduate School of Business, University of Santa Clara
Abstract
In this paper we present a model of a profit maximizing firm in which one price is set for the entire multiperiod planning horizon. One of the consequences of such a pricing policy, if one employs widely used assumptions about demand and cost functions, is a decision rule for choosing the optimal price which may be interpreted as the "full -cost" pricing equation of much recent controversy. The significance of this result lies in the fact that full-cost pricing and profit maximization have often been held to be inconsistent. In addition, this model integrates the pricing decision with the other decisions taken by the firm.
Recommended Citation
Heineke, John, and Gary Fathke. "Rigid Pricing Policies and Profit Maximization." Santa Clara Business Review 2.1 (1971): 19-22.
