Dual pricing insulates managers from the realities of the marketplace because costs, not market prices, affect the revenues of the supplying division.

Question

Quizplus · Accepted Answer

Dual pricing entails charging different prices to different internal and external customers. This approach can insulate managers from market realities because they may not be motivated to adjust prices according to demand and supply conditions in the marketplace. Instead, they may focus on recovering their costs and earning a return on their investments. This can result in inefficiencies and missed opportunities to capture value from market segments that are willing to pay more for the product or service.

Dual Pricing Insulates Managers from the Realities of the Marketplace