Facilitating Practices: The Effects of Advance Notice and Best-Price Policies
Even if firms in a market choose discount prices noncooperatively, the use of most-favored customer and meet-or-release contracts enables those firms to adopt quantity-choice strategies. Consequently, there can be a range of list prices that are impervious to unilateral nonselective discounts, but this range does not include prices above the level determined in a Cournot equilibrium. The practice of advance public notification of list-price increases can facilitate the establishment of such supracompetitive list prices, as was argued in the recent FTC Ethyl case. The possibility of offering discounts selectively results in a much more competitive situation.
Year of publication: |
1987
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Authors: | Holt, Charles A. ; Scheffman, David T. |
Published in: |
RAND Journal of Economics. - The RAND Corporation, ISSN 0741-6261. - Vol. 18.1987, 2, p. 187-197
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Publisher: |
The RAND Corporation |
Saved in:
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