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Dynamic duopoly with best-price clauses

  • Schnitzer, Monika

This article investigates best-price clauses as a strategic devise to facilitate collusion in a dynamic duopoly game. Best-price clauses guarantee rebates on the purchase price if a customer finds a better price after his purchase. Two different price clauses are distinguished: "most favored customer" and "meet or release." I examine the collusive potential of both clauses in a finite-horizon duopoly model with homogeneous durable goods. In each period, new consumers enter the market. I show that in this context, meet-or-release clauses have a greater anticompetitive potential than most-favored-customer clauses.

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Paper provided by University of Munich, Department of Economics in its series Munich Reprints in Economics with number 3108.

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Date of creation: 1994
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Publication status: Published in RAND Journal of Economics 1 25(1994): pp. 186-196
Handle: RePEc:lmu:muenar:3108
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