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Free-on-board and uniform delivery pricing strategies in a mixed duopsony

2010; Oxford University Press; Volume: 38; Issue: 1 Linguagem: Inglês

10.1093/erae/jbq048

1464-3618

Panos Fousekis,

Cooperative Studies and Economics

This paper analyses free-on-board (FOB) versus uniform delivery (UD) pricing policy choices in a mixed duopsony market. We use a two-stage game between a profit maximising investor owned firm and a cooperative which aims at maximising the welfare of its members. The results show that UD (FOB) pricing will be chosen by both competitors in markets where transportation costs are small (large) relative to the net value of the primary product. A mixed FOB–UD pricing equilibrium emerges for an intermediate market structure.