The present work analyzes free-on-board against uniform
delivered strategic prices in pure and mixed duopolistic spatial markets with reference to the food sector.
Along with investor owned firms (IOFs) that maximize profits, we introduce member
welfare maximizing cooperatives (COOPs) and examine
their impact on the strategic pricing choices.
Demand is price responsive.
We use a two stage game between
two IOFs, between an IOF and a COOP, and between two COOPs.
The findings indicate that the introduction of COOPs acts as a disciplinary
factor regarding the pricing behavior of the IOFs.
As competition in the spatial market escalates, we move from
the quasi--collusive (FOB,FOB)
Nash equilibrium, where there are only IOFs in the market, to the more aggressive (UD,UD)
strategic pricing configuration where COOPs replace one or both IOFs in the market
