In a high tech industry with constant opportunities for technological innovation and product improvement that has medium to low barriers to entry, fairly low minimum efficient size of the plant relative to the market, and high profit margins, the best pricing strategy might be A

Marketing Dec 22, 2020

In a high tech industry with constant opportunities for technological innovation and product improvement that has medium to low barriers to entry, fairly low minimum efficient size of the plant relative to the market, and high profit margins, the best pricing strategy might be

A. limit pricing.

B. predatory pricing.

C..cream skimming.

D. price discrimination.

E. mark-up pricing.

Expert Solution

The correct answer is A) limit pricing

Limit pricing is a pricing strategy that can be used in the high tech industry with constant opportunities for technological innovation and product improvement that has medium to low barriers to entry, fairly low minimum efficient size of the plant relative to the market, and high-profit margins. Limit pricing is a technique where the producer set prices so low that it deters new entrants. In other words, prices are set low so that new entrants do not get attracted to the market.

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