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Imperfect Competition and Basing-Point Pricing: Evidence from the Softwood Plywood Industry

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  • Gilligan, Thomas W

Abstract

The Federal Trade Commission's action to eliminate basing-point pricing in the soft plywood industry during the mid 1970s created a natural experiment: the author finds that the FTC's action had no effect on the delivered price of the base-site product (Douglas fir plywood) but decreased the delivered price of the non-base-site product (pine plywood) for many consumers. The evidence suggests that the detrimental effects of basing-point pricing for economic welfare were reflected entirely in the behavior of non-base-site firms. Copyright 1992 by American Economic Association.

Suggested Citation

  • Gilligan, Thomas W, 1992. "Imperfect Competition and Basing-Point Pricing: Evidence from the Softwood Plywood Industry," American Economic Review, American Economic Association, vol. 82(5), pages 1106-1119, December.
    • Handle: RePEc:aea:aecrev:v:82:y:1992:i:5:p:1106-19
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    Cited by:

    1. Thomas W. Gilligan & Subrata Sarkar, 1998. "Statistical Causality and Strategic Behavior in Industrial Markets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 7(2), pages 183-208, June.
    2. Meghan R. Busse, 2000. "Multimarket Contact and Price Coordination in the Cellular Telephone Industry," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 9(3), pages 287-320, June.
    3. Iwan Bos & Maarten Pieter Schinkel, 2009. "Tracing the Base: A Topographic Test for Collusive Basing-Point Pricing," Tinbergen Institute Discussion Papers 09-007/1, Tinbergen Institute.

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