gent valuation methods are used to identify observed and unobserved preferences of goods and services. We apply these methods to compute willingness to pay (WTP) for a product conditional on having purchased another offered product. We provide a derivation for own-price and compensated cross-price elasticities whose results suggest a pricing strategy considering all offered goods simultaneously. Therefore, we solve the social planner’s problem maximizing a weighted function of producer’s revenues and consumer’s utility for the set of optimal prices. We show an application to collegiate sports, but these methods can be extended in a straightforward fashion to other goods.
C30, C35, C40, D12, D40, D60, Z20
Rosas, Francisco; Acerenza, Santiago; and Orazem, Peter, "Optimal pricing strategies for a cluster of goods: Own- and cross-price effects with correlated tastes" (2016). Economics Working Papers: 16008.