%0 Journal Article %T Globalization: Alternative Pricing in a Peak-Load Pricing Model %A Gerald Aranoff %J Modern Economy %P 888-896 %@ 2152-7261 %D 2017 %I Scientific Research Publishing %R 10.4236/me.2017.87062 %X We discuss globalization and the current recession in manufacturing and construction. We present a theoretical model of globalization, of two countries, X and Y, each with open-market systems domestically and internationally. We compare two pricing policies in each country: short-run marginal cost, SRMC, versus prices fixed, \"\", over the business cycle. We present a proposition and proof. We give a detailed numerical example with graphs for each country. The main result is that \"\" over the business cycle increases the volatility of Q demand over the cycle and increases consumer surplus in both countries under certain conditions. The numerical example shows a drawback of SRMC pricing under demand fluctuations¡ªthat the required price in high-demand times to balance accounts becomes extremely high. Consumers are better off with \"\", paying a small increase over SRMC in the off-peak, 6/7th of the time, to avoid the extremely large required price of SRMC in the peak times, because it¡¯s only 1/7 of the time. The surprising point is that though peak times are infrequent, the prices and quantities at peak times determine which pricing arrangement is better for consumers. %K Globalization %K Manufacturing %K Business Cycle %K Marginal-Cost Pricing %K Output-Rate Flexibility %U http://www.scirp.org/journal/PaperInformation.aspx?PaperID=77740