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Spring 2017

AEM 4160: Strategic Pricing



!NEW! Anonymous Survey about Group Work

Syllabus [ pdf ]

Attendance Tracking

Note of Absence Electronic Form

Assigned Harvard Business Cases

Class Blog (Blogging Guide)


Important dates

Thu, March 2
Thu, March 30
Thu, April 13
Thu, May 9

Exam 1
Exam 2
Project topic and outline due
Mini-Exam, Final paper due



Tentative course schedule

Date Lecture Topic Readings, Slides, Assignments and other materials

January 26

Lecture 1

Introduction, Syllabus

January 31, February 2

Lecture 2, 3

Overview of demand and cost functions applicable to pricing analysis

  • Demand, elasticity, and revenue functions
  • Substitutes and complements
  • Consumer surplus
  • Lerner's index 
  • Product differentiation
  • Price discrimination


Homework 1 (Due February 14)
Required reading: The Atlantic Article "Have You Ever Tried To Sell a Diamond?" [ also pdf ]
[Humorous summary of the article by CollegeHumor]
HW1 Answers | HW1 Blog Posts

February 7, February 9

Lecture 4, 5

Basic pricing techniques

  • Single-market pricing
  • Multi-market pricing
  • Market Segmentation
  • Two-part tariff
  • First/Second degree PD

Smart Money: What outlet malls don't want you to know.

Slate: The Economics of Priceline
Slate: Confusion Pricing

Homework 2 (Due February 23)
HW2 Answers HW2 Blog Posts

February 14

Lecture 6

Price discrimination

  • Third degree price discrimination
  • Bundling
  • Tying

WSJ: E-book and e-reader pricing
Buying in bulk and paying more: Quantity Surcharges


February 16, February 23

Lecture 7, 8,9

Other pricing and marketing techniques

  • Bundling
  • Tying
Required Reading: HBS case "Virgin Mobile: Pricing for the very first time"

Lysine Cartel Tapes [1] [2] [3]
Illegal Cartels in "Fair Fight in the Marketplace"


Exam 1 March 2
Exam Prep-Sheet |  Sample Exam

March 7,
March 9
Lecture 10, 11
  • Tacit Collusion and Pricing
  • Price matching

Pricing Information goods

  • Cost Structure
  • Network Externalities
  • Free Information
  • Online Music Industry


Slate: "Digital Music Pricing"

Atlantic: Moore's Law

Recommended Reading:  HBS case "Freemium Pricing at Dropbox"


March 14


Lecture 11


Pricing Pharmaceuticals

  • QALY
  • Merck: Pricing Gardasil

Required Reading:  HBS case "Merck: Pricing Gardasil"

NYT article on the Value of Human Life and QALY

Homework 3 (Due March 16)
HBS case: Pricing Information: How to Customize Both the Product and Its Price"
HBS case: "Netflix: Pricing Decision 2011"
HW3 Blog Posts

March 21, 23 Lecture 13, 14

Advanced sales and Overbooking

  • Services Pricing
  • Advanced booking
  • Refund strategies
  • Pricing with capacity constraints
  • Overbooking

Behavioral Economics and Pricing

  • Reference Pricing
  • Netflix Pricing Scandal
  • JC Penney "Fair and Square"


--In class excercise

NYT: "Shopper Alert: Price May Drop for You Alone"

Slate: "How Much Should Hotel Web Access Cost?"

Slate: "Starbucks Economics"
Slate: "Starbucks vs. its Addicts"


Exam 2  March 30
Exam Prep-Sheet | Sample Exam

April 11, 13

Lecture 16, 17

Presentation Prep and Training:
        Presentation guidelines
Cornell Databases
Excel Tutorial 
Data Analysis

  • Presentation Prep Slides

Homework 5 (April 18)

Final Presentation and Paper materials:

Presentation and Paper Guidelines and Important Deadlines
Sample Presentations  (Movies | Luxury Auto)
Cornell Mann Library Resources

 Group Reserved topic Presentation date
Courtney, Elizabeth, Victoria, Brianna Coffee April 18 #1
Erin, Seth, Mitchell, Jordan   Beer April 18 #2
Tayyaba, Puneet, Mahir, Anna Breakfast cereals April 20 #1
Alan, Alexander, Catherine, Mac Marijuana April 20 #2
Sam, Philip, Eric, Ishan Wearables  April 25 #1
Casey, Alyssa, Jake, Dave Pizza Chains April 25 #2
Chris, Christine, Kerri, Sarah Cruiselines April 27 #1
Brian, Eric , Stephanie, Meg Eyewear April 27 #2
Jordan, Evan, Giselle, Jessica Airlines May 2 #1
Elena, Zining, Bobby, Conor Home Sharing (Airbnb) May 2 #1
Elleen, Tasha, Ray, Rosa Amusement parks May 4 #1
Andrew, Robert, Chandler, Jordan Casinos May 4 #2



April 18-May 9


Student Presentations


May 9


Mini-Exam, Final paper is due




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