Case
Teaching Notes
Abstract
Over the course of U.S. history, prices have stabilized and become more consistent across large distances. At the same time, historical trends show a transition from dynamic to static prices. In past centuries, sellers could discriminate more on prices on various products, because, for one reason, products were less homogenous than they are today. This case study examines the advantages in both dynamic and static pricing systems, asking readers to imagine themselves as the owner of a general store in a hypothetical Midwestern village in the late nineteenth century, and to compare business practices of that era with practices of today. Why might you, the storekeeper, decide to use dynamic prices, and what are the factors that pressure you not to? The case considers dynamic pricing as a concern of history, economy, and ethics. It raises the wider question of whether static prices will hold nationwide, or whether a new wave of dynamic pricing may enter the marketplace.
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