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Transactions/List Pricing

Daniel Seidmann

No 275458, Foerder Institute for Economic Research Working Papers from Tel-Aviv University > Foerder Institute for Economic Research

Abstract: Suppose that a representative downstream firm must buy relationship-specific capital before an upstream monopolist is privately informed of its unit costs. We show that the upstream firm will write a contract before the downstream firm invests, specifying a maximum (list) price which may be discounted when costs are low. This model therefore rationalizes transactions/list pricing: a prevalent mode of inter-firm trading. We use our results to explain Stigler and Kindahl's findings on medium-term price dynamics.

Keywords: Demand and Price Analysis; Financial Economics (search for similar items in EconPapers)
Pages: 35
Date: 1988-11
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http://ageconsearch.umn.edu/record/275458/files/TEL-AVIV-FSWP-135.pdf (application/pdf)

Related works:
Journal Article: Transactions/List Pricing (1990) Downloads
Working Paper: TRANSACTIONS/LIST PRICING (1988)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:isfiwp:275458

DOI: 10.22004/ag.econ.275458

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