Journal Article

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

Panos Fousekis

in European Review of Agricultural Economics

Volume 38, issue 1, pages 119-139
Published in print March 2011 | ISSN: 0165-1587
Published online December 2010 | e-ISSN: 1464-3618 | DOI: http://dx.doi.org/10.1093/erae/jbq048
Free-on-board and uniform delivery pricing strategies in a mixed duopsony

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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.

Keywords: spatial competition; mixed duopsony; cooperative; D43; L13; Q13

Journal Article.  6808 words.  Illustrated.

Subjects: Agricultural Economics ; Market Structure, Firm Strategy, and Market Performance ; Market Structure and Pricing

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