Schumpeter’s Innovation Theory of Trade Cycle

The innovation theory of trade cycles is associated with the name of Joseph Schumpeter. Schumpeter accepts Juglar’s statement that “the cause of depression is prosperity,” and gives his own view about the originating cause of the cycle. “Innovations in the industrial and commercial organization are virtually mainly the outcome of … read more

Inter-temporal Price Discrimination

Two other closely related forms of price discrimination are important and widely practiced. The first of these is inter-temporal price discrimination: separating consumers with different demand functions into different groups by charging different prices at different points in time. The second is peak-load pricing: charging higher prices during peak periods … read more

Peak Load Pricing

Peak-load pricing also involves charging different prices at different points in time. Rather than capturing consumer surplus, however, the objective is to increase economic efficiency by charging consumers prices that are close to marginal cost. For some goods and services, demand peaks at particular times—for roads and tunnels during commuter … read more