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Analyses of the widening of the deficit

1. I select ALLTEL Wireless Corporate, briefly explain how this company uses dynamic pricing. Discuss the benefits and drawbacks of dynamic pricing for this particular company. Conclude with a summary of your findings. Cite your Reference.

2. In a committee of the United Nations you are considering the following questions: (a) When is international trade an opportunity for workers? When is it a threat to workers? (b) What are some of the major challenges confronting the international trading system? Cite your Reference.

3.The media and others suggest that the current account deficit run by the U.S. is a problem for the economy. What do you think? what action(s) would you advise federal government officials to take on this issue? Cite your References.

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1. I select ALLTEL Wireless Corporate, briefly explain how this company uses dynamic pricing. Discuss the benefits and drawbacks of dynamic pricing for this particular company. Conclude with a summary of your findings. Cite your Reference.

Economists technically define price discrimination by different rates of return, or differences in net prices. That is, two sales are discriminatory when they have different ratios of price to marginal cost. Louis Phlips, Price Discrimination, in THE NEW PALGRAVE: A DICTIONARY of ECONOMICS 952, 952-54 (John Eatwell, et al. eds., 1987). See also HERBERT HOVENKAMP, FEDERAL ANTITRUST POLICY: THE LAWS OF COMPETITION AND ITS PRACTICE §14.1 (2d ed. 1999).
Dynamic pricing involve flexible pricing or different price to different customers. Discrimination in pricing depends on following factors:
* The method of payment you want to extend to the customer. (Cash, invoice for 30 day payment, time payments, no payments until ...)
* The cost for the prospect to switch to your offering from their current solution. Does a high switching cost imply that you need to price low to offset the switching costs or should you price high because the prospect has already committed to a high dollar solution?
* Are you able to define price thresholds, upper & lower, where the prospect will consider the price unreasonable?
* Is it reasonable to segment the market for different prices? eg: first class vs tourist air fares, branded vs unbranded offerings, first time buyer vs existing customer.
* Are there special conditions (atmosphere/ambiance) at the time of purchase? For example, the price for a cup of coffee in a deli is likely to be much lower than for a similar cup in a Hilton hotel.

Case of Alltel

Alltel is an American telecommunications company with headquarters in Little Rock, Arkansas. Alltel provides wireless services to residential and business customers in 35 states. With a market cap of $24.79 billion and over 15 million customers as of early 2006, Alltel is the largest regional mobile phone company in America, and the fifth largest mobile phone company overall. (wikipedia)

Dynamic pricing
The table is giving one sample rate plan for business customers:

National Freedom Plans $39.99 $49.99 $79.99 $99.99 $149.99 $199.99
Included Anytime Minutes 500 1000 1400 2100 4000 6000
Night and Weekend Minutes unlimited unlimited unlimited unlimited unlimited unlimited
Mobile-to-Mobile Minutes unlimited unlimited unlimited unlimited unlimited unlimited
Add'l Minute Rate 40¢ 40¢ 35¢ 25¢ 25¢ 25¢

http://www.alltel.com/business/wireless/plans/index.html

By charging different prices, they are able to provide their services to variety of customers. Here they are giving larger number of free minutes to serve those customers who talk more. Thus it helps in segmenting the customers. This strategy helps in optimizing the profit.
Benefits
Economic theory suggests price discrimination may perhaps promote an efficient use of a society's resources. It also helps in satisfying the need of different set of customer segments. Moreover by using data from the actual behavior of individuals, companies have the potential to micro-manage their marketing and pricing ...

Solution Summary

Analyses of the widening of the deficit are referenced.

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