SPORTS MARKETING Explain why a monopolistic team can have positive profits in the long run, but...

SPORTS MARKETING

Explain why a monopolistic team can have positive profits in the long run, but perfectly competitive teams have zero profits in the long run.

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What is the purpose of two-part pricing? Be specific.

Expert Solution

Answer : 1) In case monopolistic market high entry barrier exist. But in case of perfectly competitive market free entry barrier exist. Hence when the monopolistic team earn positive profit then new teams can not enter into the field in long run. As a result, in long-run the monopolistic team earn positive profit. But due free entry barrier in perfectly competitive market when the team earn profit then in long-run new teams enter into the field. As a result, in long-run the perfectly competitive teams earn zero profit.

2) Two-part pricing is a price discrimination strategy. In two-part pricing strategy the price level is composed in two parts.These two-parts of pricing are lump-sum fee and per unit charge. By using this two-part pricing strategy the firm capture more consumer surplus. As a result, the firm's profit level increase. So, the main purpose of two-part pricing is to increase the firm's profit level.

Rahul Sunny answered 6 months ago

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