Search results for "Monopoly price"
showing 3 items of 3 documents
Upward and Downward Limit Pricing: The Role of Post-Entry Competition
2005
Under asymmetric information, entry-deterring strategies by an incumbent monopolist can consist of deviations from its static monopoly price through downward deviations termed downward limit pricing, or upward deviations termed upward limit pricing. Our analysis shows that the mode of post-entry competition influences the range of situations in which an incumbent adopts a strategy of downward limit pricing instead of an upward one: this range is greater under price than under output competition; it is decreasing in the degree of product differentiation; and with homogeneous product only downward limit pricing emerges under price competition, while upward limit pricing can still take place w…
Entry under uncertainty: Limit and most-favored-customer pricing
2015
Abstract In the absence of uncertainty, an incumbent that attempts to prevent entry of rival firms can have no incentive to offer a most-favored-customer (MFC) clause because it could lead to higher post-entry prices. Our analysis suggests that this is not necessarily the case under uncertainty. In the presence of uncertainty, the incumbent can set a limit price that affects the entry decision. Limit pricing involves a pre-entry price different from the static monopoly price, which leads to a signaling cost. We show that part of this cost can be distributed over several periods by means of consumer refunds from the MFC clause. If the discount factor is not very high, the incumbent adopts th…
The Role of Force
1995
Max Weber defined the state as an organization which successfully maintained the monopoly of legitimate violence over certain territory. This definition, simple as it is, raises several problems. Firstly, it should be noted that it is at best the definition of the modern State. There have been organizations which are, perhaps anachronistically, called states by historians or anthropologists, but which did not satisfy the definition.