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A Note on the Most‐Favoured‐Customer Pricing Policy
Author(s) -
Ohnishi Kazuhiro
Publication year - 2003
Publication title -
bulletin of economic research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.227
H-Index - 29
eISSN - 1467-8586
pISSN - 0307-3378
DOI - 10.1111/1467-8586.00184
Subject(s) - duopoly , economics , variable (mathematics) , microeconomics , pricing strategies , price policy , mathematics , mathematical analysis , agriculture , ecology , cournot competition , biology
This paper extends the retroactive most‐favoured‐customer pricing policy examined by Cooper (1986). He showed that the policy enabled both firms in a duopoly to offer higher prices and to enjoy higher profits. This paper introduces a variable into the most‐favoured‐customer pricing policy. Then, it shows that there is an equilibrium in which the duopolists can further increase their profits.