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A Note on the Most‐Favoured‐Customer Pricing Policy

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  • Kazuhiro Ohnishi

Abstract

This paper extends the retroactive most‐favoured‐customer pricing policy examined by Cooper (1986). He showed that the policy enabled both firms in a duopoly to offer higher prices and to enjoy higher profits. This paper introduces a variable into the most‐favoured‐customer pricing policy. Then, it shows that there is an equilibrium in which the duopolists can further increase their profits.

Suggested Citation

  • Kazuhiro Ohnishi, 2003. "A Note on the Most‐Favoured‐Customer Pricing Policy," Bulletin of Economic Research, Wiley Blackwell, vol. 55(4), pages 407-413, October.
    • Handle: RePEc:bla:buecrs:v:55:y:2003:i:4:p:407-413
    DOI: 10.1111/1467-8586.00184
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    References listed on IDEAS

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    1. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June.
    2. Kazuhiro Ohnishi, 2001. "Lifetime Employment Contract and Strategic Entry Deterrence: Cournot and Bertrand," Australian Economic Papers, Wiley Blackwell, vol. 40(1), pages 30-43, March.
    3. Neilson, William S. & Winter, Harold, 1992. "Unilateral most-favored-customer pricing : A comparison with Stackelberg," Economics Letters, Elsevier, vol. 38(2), pages 229-232, February.
    4. Matsumura, Toshihiro, 1998. "A Two-Stage Price-Setting Duopoly: Bertrand or Stackelberg," Australian Economic Papers, Wiley Blackwell, vol. 37(2), pages 103-118, June.
    5. Aguirre, Inaki, 2000. "The Most-Favoured-Customer Pricing Policy and Competitive Advantage," Bulletin of Economic Research, Wiley Blackwell, vol. 52(3), pages 215-223, July.
    6. William S. Neilson & Harold Winter, 1993. "Bilateral Most-Favored-Customer Pricing and Collusion," RAND Journal of Economics, The RAND Corporation, vol. 24(1), pages 147-155, Spring.
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