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Chain-Store Pricing for Strategic Accommodation

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  • Dobson, Paul W.
  • Waterson, Michael

Abstract

Chain-stores now dominate most areas of retailing. While retailers may operate nationally or even internationally, the markets they compete in are largely local. How should they best operate pricing policy in respect of the different markets served - price uniformly across the local markets or on a local basis according to market conditions? We model this by allowing local market differences, with entry being inevitable in certain markets while being naturally or institutionally blockaded in others. We show that practising price discrimination is not always best for the chain-store. Competitive conditions exist under which uniform pricing can raise profits.

Suggested Citation

  • Dobson, Paul W. & Waterson, Michael, 2003. "Chain-Store Pricing for Strategic Accommodation," Economic Research Papers 269490, University of Warwick - Department of Economics.
    • Handle: RePEc:ags:uwarer:269490
    DOI: 10.22004/ag.econ.269490
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    References listed on IDEAS

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    More about this item

    Keywords

    Agricultural and Food Policy; Demand and Price Analysis;

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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