Pricing in information Technology Markets

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Pricing in information Technology Markets

Aggregate demand will for a certain amount of time be price inelastic, meaning that some customers will want the notebook irrespective of the price. Quasar might resort to using high introductory prices to defer demand.

At first, Quasar will have a monopoly on this technology and it will be in a strong position to demand a large premium over the price of other notebook PCs. Over time, companies i

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cluding Dell and HP will try to develop comparable products. As these products get introduced, the marketplace becomes an oligopoly. At this point, Quasar's customers become more price sensitive. As more competitors enter this market, pure competition develops. Quasar must cut prices or risk losing market share. During the phases leading to pure competition, Quasar should lower prices in the weeks before a new product introduction to make room at the top of its pricing structure for the new product.

Firms that operate in an oligopoly must take into consideration how competitors will react to their price and output decisio

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		Dell HP \| \| pure competition \| irrespective price \| pricing structure \| market share \| production costs \|


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