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Most-Favoured-Customer Pricing Policy as an Entry Deterrence Device

Author

Listed:
  • Aguirre Perez, I

Abstract

The paper is concerned with the effects upon competition of most-favored-customer pricing policy. We consider a model where a multimarket incumbent firm faces a threat of entry in one of its two markets. We show that most-favored-customer clauses, or the commitment to uniform pricing, may change the post-entry competition to the advantage of the incumbent whether it is played according to Cournot or Bertrand rules.

Suggested Citation

  • Aguirre Perez, I, 1997. "Most-Favoured-Customer Pricing Policy as an Entry Deterrence Device," ASSET - Instituto De Economia Publica 151, ASSET (Association of Southern European Economic Theorists).
    • Handle: RePEc:fth:inecpu:151
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    Cited by:

    1. Iñaki Aguirre, 1999. "Information transmission and incentives not to price discriminate," Spanish Economic Review, Springer;Spanish Economic Association, vol. 1(3), pages 283-299.

    More about this item

    Keywords

    PRICING ; CONSUMPTION ; BUSINESS ORGANIZATION;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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