Theory Of Rigid Prices And The Language Market

  • Vitezslav Bican Faculty of Business Administration, University of Economics in Prague, Department of Microeconomics
Keywords: Language Market, Pricing Models

Abstract

The aim of the paper is to reveal the principles described by various pricing theories and find those principles in the real pricing policies of language market subjects. The theoretical section deals with the three in microeconomics essential pricing theories, the neoclassical, the post-Keynesian and the Austrian. Then, I am commenting the results of my own research concerning the pricing policies of different private language schools. I use the notion of “relevant competition“ to describe the reactive pricing policy of various language schools as reaction to the pricing changes of the others. Based on that concept I find the principles of pricing in the respective market by distinguishing the long and short-term policies. One of the mail findings of the article is that there is a significant difference between short and long-term pricing strategy in the language school market, when both of these strategies are based on different theoretical pricing concept. Nevertheless, both these theories lead to some respect to rigid (non-flexible) prices.

References

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Published
2011-12-23
Section
Articles