The binary flow chart is used to study and simulate price decisions. The elements uncovered include both market factors and organizational factors. Testing the model for predictive accuracy and simulative ability is reviewed. Marketing implications include a legitimate defense against charges of collusion in price-setting in an oligopoly, and a better understanding of the market's reaction to organizational components. Marketing strategists may benefit from insights into competitors’ behavior, and from tools useful for developing strategies in different markets.
Get full access to this article
View all access options for this article.
References
1.
CyertRichard M., and MarchJames G., A Behavioral Theory of the Firm, Englewood Cliffs, N. J.: Prentice-Hall, 1963, passim.
2.
FarrellM. J., “Deductive Systems and Empirical Generalizations in the Theory of the Firm,”Oxford Economic Papers, 4(1952), 45–49.
3.
FellnerWilliam, Competition Among the Few, New York: A. A. Knott, 1959, 14.
4.
FrankRonald E., KuehnAlfred A., and MassyWilliam F., eds., Quantitative Techniques in Marketing Analysis, Homewood, Ill.: Richard D. Irwin, 1963, 106–124, 461–548.
5.
MarchJames G., CyertRichard M., “Models in a Behavioral Theory of the Firm,”Behavioral Science, IV (April 1959), 81–95.
6.
MorgenrothWilliam M., A Heuristic Model of Price Determination, Columbus: Ohio State University Bureau of Business Research, late1964.
7.
PapandreouAndreas, “Some Basic Problems in the Theory of the Firm,”A Survey of Contemporary Economics, II ed., Homewood, Ill.: Richard D. Irwin, 1952, 183–219.
8.
RothschildKurt W., “Price Theory and Oligopoly,”Economic Journal, LVII (1947), 290–320.
9.
SavvasJim D., and MassyWilliam F., “Logical Flow Models for Marketing Analysis,”Journal of Marketing, 28(January 1964), 32–37.
10.
SimonHerbert, “Theories of Decision-Making in Economics and Behavioral Science,”The American Economic Review, XLIX (June 1959), 252–283.
11.
SimonHerbert, and NewellAllen, The Simulation of Human Thought, Lakewood, N. J.: Rand (Publication P1734), June 1959.
12.
StarbuckWilliam, “Testing Case Descriptive Models,”Behavioral Science (July 1961), 191–199.
13.
StiglerGeorge J., “A Theory of Oligopoly,”The Journal of Political Economy, LXXII (February 1964), 44–61.
