IDEAS home Printed from https://ideas.repec.org/a/cje/issued/v24y1991i1p70-100.html
   My bibliography  Save this article

Strategic Pricing with Customer Rationing: The Case of Primary Metals

Author

Listed:
  • Margaret E. Slade

Abstract

Firms in primary-metal industries often charge subcompetitive prices and, in periods of high demand, they may ration their customers. A model is developed to explain these empirical regularities. In the model, firms with market power are aware that the price they charge today affects their demand tomorrow. In addition, the strategic interactions among firms reinforces this intertemporal effect. In the equilibrium of the two-state game, oligopolists can price below marginal cost. And, when capacity constraints are introduced, the equilibrium can involve rationing. Model predictions are assessed using market-structure and technology data for several primary-metal industries.

Suggested Citation

  • Margaret E. Slade, 1991. "Strategic Pricing with Customer Rationing: The Case of Primary Metals," Canadian Journal of Economics, Canadian Economics Association, vol. 24(1), pages 70-100, February.
  • Handle: RePEc:cje:issued:v:24:y:1991:i:1:p:70-100
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0008-4085%28199102%2924%3A1%3C70%3ASPWCRT%3E2.0.CO%3B2-Y
    Download Restriction: only available to JSTOR subscribers

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Choudhri, Ehsan U & Kochin, Levis A, 1980. "The Exchange Rate and the International Transmission of Business Cycle Disturbances: Some Evidence from the Great Depression," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 12(4), pages 565-574, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Agostini, Claudio & Saavedra, Eduardo H., 2013. "Chile: Port congestion and efficient rationing in cargo transfer operations," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    2. Felix Oberholzer-Gee, 2003. "A Market for Time: Fairness and Efficiency in Waiting Lines," CREMA Working Paper Series 2003-04, Center for Research in Economics, Management and the Arts (CREMA).
    3. Richard J. Gilbert & Paul Klemperer, 2000. "An Equilibrium Theory of Rationing," RAND Journal of Economics, The RAND Corporation, vol. 31(1), pages 1-21, Spring.
    4. Kim, Moshe & Kliger, Doron & Vale, Bent, 2003. "Estimating switching costs: the case of banking," Journal of Financial Intermediation, Elsevier, vol. 12(1), pages 25-56, January.
    5. Claudio Agostini, 2005. "Testing for Market Power under the Two-Price System in the U.S. Copper Industry," ILADES-Georgetown University Working Papers inv159, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines.
    6. Hubbard, R Glenn & Weiner, Robert J, 1992. "Long-Term Contracting and Multiple-Price Systems," The Journal of Business, University of Chicago Press, vol. 65(2), pages 177-198, April.
    7. Baldursson, Fridrik M., 1998. "Irreversible investment under uncertainty in oligopoly," Journal of Economic Dynamics and Control, Elsevier, vol. 22(4), pages 627-644, April.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cje:issued:v:24:y:1991:i:1:p:70-100. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Prof. Werner Antweiler). General contact details of provider: http://edirc.repec.org/data/ceaaaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.