Basing point pricing: Competition versus collusion
AbstractThe authors consider the implications of game-theoretic models for the competitive or collusive nature of basing point pricing. In one-shot games, equilibrium price schedules do not generally conform to basing point pricing with unrestricted price competition. Nevertheless, basing point pricing can emerge in dynamic contexts. Define modified FOB price policy as using FOB in one's natural market and matching the rival's delivered price whenever profitable. A configuration where both firms do this is a subgame perfect equilibrium of a two-stage game where firms choose first price policies and then compete in the marketplace. Further, with repeated.competition basing point pricing can be used as punishment device. Copyright 1992 by Blackwell Publishing Ltd.
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Bibliographic InfoPaper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers RP with number -1003.
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Note: In : The Journal of Industrial Economics, 40(3), 249-260, 1992
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Other versions of this item:
- Thisse, Jacques-Francois & Vives, Xavier, 1992. "Basing Point Pricing: Competition versus Collusion," Journal of Industrial Economics, Wiley Blackwell, vol. 40(3), pages 249-60, September.
- Thisse, J-F. & Vives, X., 1990. "Basing Point Pricing: Competition Versus Collusion," UFAE and IAE Working Papers 136-90, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
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- Miklós-Thal, Jeanine, 2008. "Delivered pricing and the impact of spatial differentiation on cartel stability," International Journal of Industrial Organization, Elsevier, vol. 26(6), pages 1365-1380, November.
- Vives, Xavier, 2005. "Games with strategic complementarities: New applications to industrial organization," International Journal of Industrial Organization, Elsevier, vol. 23(7-8), pages 625-637, September.
- Aguirre, Inaki & Espinosa, Maria Paz & Macho-Stadler, Ines, 1998. "Strategic entry deterrence through spatial price discrimination," Regional Science and Urban Economics, Elsevier, vol. 28(3), pages 297-314, May.
- Iñaki Aguirre & Ana M. Martin, 2001.
"On the strategic choice of spatial price policy: the role of the pricing game rules,"
AccessEcon, vol. 12(2), pages 1-7.
- Martín Arroyuelos, Ana María & Aguirre Pérez, Iñaki, 2001. "On the strategic choice of spatial price policy: the role of the pricing game rules," BILTOKI 2001-04, Universidad del País Vasco - Departamento de Economía Aplicada III (Econometría y Estadística).
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