Hello I have a difficulty in answering this question can any one please help me ?as soon as possible ?
Assume you are a manager at one of supermarkets in town. Supermarkets are torn between pricing high to extract buyer surplus from loyal customers and pricing low to grab price-sensitive consumers. The dilemma is compounded in the presence of competition. Cutting price may not raise profit if a competing supermarket cuts price even lower.
A summer intern college student suggests to randomize the price discounts. Indeed, the dazzling array of “specials” in a supermarket advertisement does appear like randomized discounts.
Please evaluate the suggestion above. Would you adopt that suggestion, and why?
