BASING-POINT PRICING AND INCOMPLETE COLLUSION

Authors
LEVY DT REITZES JD
Citation
Dt. Levy et Jd. Reitzes, BASING-POINT PRICING AND INCOMPLETE COLLUSION, Journal of regional science, 33(1), 1993, pp. 27-35
Citations number
20
Categorie Soggetti
Environmental Studies","Planning & Development
Journal title
Journal of regional science → ACNP
ISSN journal
00224146
Volume
33
Issue
1
Year of publication
1993
Pages
27 - 35
Database
ISI
SICI code
0022-4146(1993)33:1<27:BPAIC>2.0.ZU;2-M
Abstract
It has been contended that basing-point pricing (BPP) is not indicativ e of anticompetitive behavior because a cartel would never attain maxi mum profits by using BPP. We disprove this contention. BPP is the prof it-maximizing pricing strategy for a cartel that faces competition onl y at selected locations. In addition, our model explains the emergence of multiple basing points, and establishes that BPP must be consisten t with a market-division scheme.