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Free-on-board and uniform delivered pricing strategies in pure and mixed spatial duopolies: the strategic role of cooperatives

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  • Panagiotou, Dimitrios
  • Stavrakoudis, Athanassios

Abstract

The present work analyzes free-on-board against uniform delivered strategic prices in pure and mixed duopolistic spatial markets with reference to the food sector. Along with investor owned firms (IOFs) that maximize profits, we introduce member welfare maximizing cooperatives (COOPs) and examine their impact on the strategic pricing choices. Demand is price responsive. We use a two stage game between two IOFs, between an IOF and a COOP, and between two COOPs. The findings indicate that the introduction of COOPs acts as a disciplinary factor regarding the pricing behavior of the IOFs. As competition in the spatial market escalates, we move from the quasi--collusive (FOB,FOB) Nash equilibrium, where there are only IOFs in the market, to the more aggressive (UD,UD) strategic pricing configuration where COOPs replace one or both IOFs in the market.

Suggested Citation

  • Panagiotou, Dimitrios & Stavrakoudis, Athanassios, 2018. "Free-on-board and uniform delivered pricing strategies in pure and mixed spatial duopolies: the strategic role of cooperatives," MPRA Paper 89801, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:89801
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    References listed on IDEAS

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    1. Panos Fousekis, 2016. "Member Coordination Costs and Spatial Entry Deterrence in a Mixed Duopsony with a Cooperative," Spatial Economic Analysis, Taylor & Francis Journals, vol. 11(3), pages 340-354, July.
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    Cited by:

    1. Grashuis Jasper, 2020. "The Competitive Impact of Cooperatives on the Spot Market: A Spatial Analysis of Iowa Corn Prices," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 18(2), pages 1-11, November.
    2. Panagiotou, Dimitrios, 2021. "Asymmetric price responses of the US pork retail prices to farm and wholesale price shocks: A nonlinear ARDL approach," The Journal of Economic Asymmetries, Elsevier, vol. 23(C).

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    More about this item

    Keywords

    oligopoly spatial competition; mixed; free-on-board; uniformly delivered;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness

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