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Firms' strategies for reducing the effectiveness of the consumer price search

By Norman J. Ireland

Abstract

This paper considers a simple model of competition based on some buyers making price comparisons between two suppliers. The difficulties of making appropriate comparisons are made greater by exclusive dealer agreements and restrictions, and by suppliers trading under more than one name. It is argued that suppliers will set prices using mixed strategies, and that prices become less competitive as price comparisons become more difficult. The implications for competition policy are considered in the light of recent judgements of the UK’s Office of Fair Trading and the European Court of Justice

Topics: HC, HF
Publisher: University of Warwick, Department of Economics
Year: 2002
OAI identifier: oai:wrap.warwick.ac.uk:1563

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Citations

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