List pricing and discounting in a Bertrand-Edgeworth duopoly

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Show simple item record García Díaz, Antón Hernán, Roberto Kujal, Praveen 2012-07-19T17:40:28Z 2012-07-19T17:40:28Z 2009-11
dc.identifier.bibliographicCitation International journal of industrial organization, v. 27, n. 6, nov. 2009, pp. 719-727
dc.identifier.issn 0167-7187
dc.description.abstract List, or retail, pricing is a widely used trading institution where firms announce a price that may be discounted at a later stage. Competition authorities view list pricing and discounting as a procompetitive practice. We modify the standard Bertrand–Edgeworth duopoly model to include list pricing and a subsequent discounting stage. Both firms first simultaneously choose a maximum list price and then decide whether to discount, or not, in a subsequent stage.We show that list pricing works as a credible commitment device that induces a pure strategy outcome. This is true for a general class of rationing rules. Further unlike the dominant firm interpretation of a price leader, the low capacity firm may have incentives to commit to a low price and in this sense assume the role of a leader.
dc.description.sponsorship Hernan and Kujal acknowledge financial support from Grant ECO2008-00977/ ECON from the Spanish Ministry of Education. Kujal acknowledges financial support from the Instituto Universitario de Economía, Consolider-Ingenio 2010 and the Comunidad de Madrid (grant Excelecon).
dc.format.mimetype application/pdf
dc.language.iso eng
dc.publisher Elsevier
dc.rights ©Elsevier
dc.subject.other List pricing
dc.subject.other Discounts
dc.subject.other Capacity constrained models
dc.subject.other Mixed strategies
dc.subject.other Pure strategies
dc.subject.other Stackelberg leader
dc.title List pricing and discounting in a Bertrand-Edgeworth duopoly
dc.type article
dc.description.status Publicado
dc.subject.jel L0
dc.subject.jel L1
dc.subject.jel 4
dc.subject.jel L11
dc.subject.jel L13
dc.subject.eciencia Economía
dc.identifier.doi 10.1016/j.ijindorg.2009.03.002
dc.rights.accessRights openAccess
dc.type.version acceptedVersion
dc.identifier.publicationfirstpage 719
dc.identifier.publicationissue 6
dc.identifier.publicationlastpage 727
dc.identifier.publicationtitle International journal of industrial organization
dc.identifier.publicationvolume 27
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