Abstract
WHEN monopolistic competition exists, and especially in the case of spatial competition, seller can choose from several alternative pricing policies. In this case, the pricing policy becomes a variable over which seller has to optimize, i.e., to choose the pricing policy which yields the highest profit. Aspects of this problem of optimization, and some of its implications for spatial competition are considered in the literature. On the one hand, Beckman [1] discusses and compares different pricing policies under conditions of monopoly operating in an isolated market where the market size is predetermined. On the other hand, market equilibrium under conditions of monopolistic competition is considered by Cappoza and Order [2]. Their discussion, although covering several possible types of individual sellers' reaction functions, is limited to one type of pricing policy, as they concentrate on the f.o.b. mill pricing policy. The purpose of this note is to compare the profit performance of different pricing policies under conditions of monopolistic competition. t hree alternative pricing policies are considered:
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