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Uniform Pricing Versus Mill Pricing
Author(s) -
Wrede Matthias
Publication year - 2003
Publication title -
journal of regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.171
H-Index - 79
eISSN - 1467-9787
pISSN - 0022-4146
DOI - 10.1111/1467-9787.00008
Subject(s) - mill , competition (biology) , limit price , outcome (game theory) , economics , microeconomics , industrial organization , pricing strategies , mid price , price level , monetary economics , mechanical engineering , ecology , engineering , biology
This paper analyzes the coexistence of different pricing strategies. The purpose is to discuss how firms that are limited to uniform pricing affect the outcome of price competition among mill–price–setting firms. Price competition among (three) firms that are restricted to mill pricing is analyzed within the classic Hotelling framework and uniform–price–setting firms are considered as first movers. If uniform–price–setting firms deliver any good, they effectively separate mill–price–setting firms from each other. Finally, it is shown that price competition among first movers strengthens the effects of cross–type price competition.