Table of Contents
Economics Research International
Volume 2015 (2015), Article ID 875301, 10 pages
http://dx.doi.org/10.1155/2015/875301
Research Article

Monopoly Profit Maximization: Success and Economic Principles

1Ostwestfalen-Lippe University of Applied Sciences, Liebigstraße 87, 32657 Lemgo, Germany
2Johannes Gutenberg University of Mainz, Jakob-Welder-Weg 9, 55128 Mainz, Germany

Received 14 October 2014; Accepted 15 March 2015

Academic Editor: Udo Broll

Copyright © 2015 Korbinian von Blanckenburg and Milena Neubert. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

This paper presents a classroom experiment on pricing strategies available to monopolists. Each student makes production decisions as a monopolist during the experiment, learning from his/her own experiences what it means to be a price searcher. Full information is provided on cost conditions, while the demand function remains unknown to the participants. Given a sufficient number of periods, students will in principle be able to maximise their profits by applying a simple trial and error strategy. However, one of the objectives of the experiment is to demonstrate to students that search strategies based on economic principles are more efficient.