Dynamic duopoly with best-price clauses

Schnitzer, Monika (1994): Dynamic duopoly with best-price clauses. In: RAND Journal of Economics, Vol. 25, No. 1: pp. 186-196

Abstract

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.

• Item Type: Journal article
• Keywords: Market Structure, Firm Strategy, and Market Performance: Oligopoly and Other Imperfect Markets; Monopolistic Competition; Contestable Markets; Market Structure: Industrial Organization and Corporate Strategy; Microeconomics Theory of Firm and Industry under Imperfectly Competitive Market Structures
• Faculties: Economics; Economics > Chairs > Seminar for Comparative Economics
• Subjects: 300 Social sciences > 300 Social sciences, sociology and anthropology; 300 Social sciences > 330 Economics
• ISSN: 1756-2171; 0741-6261
• Language: English