On the choice of pricing policies: ex ante commitment and prisoners' dilemma

摘要

I study the endogenous formation of pricing policies - posted-uniform versus negotiated pricing- by using a version of a two-stage pricing game in a duopoly context. The model explains the prevalence of uniform pricing in some markets/countries and identifies a typical Prisoners' Dilemma in these cases. The sellers' commitment to a preannounced price under uniform pricing mitigates the fear of buyers that they might be exploited once they start price negotiations. While such buyers' anticipation induces sellers to adopt uniform pricing in an attempt to capture more buyers, it results in intensified competition with lower seller payoffs.