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By P.M. Holmes

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Sample text

The firm takes a more flexible line in one of its product subdivisions that had recently decided to enter the export market in a serious way. The market situation was fairly complicated. The number of producers of each type of equipment decreased with newness and sophistication of the item. In the newer fields there are one or two leading producers in each regional market. The firm in fact considers there are such economies of scale in this area that it believes about three producers will dominate Europe in a few years' time-this is where its strategy lies.

Where such firms were encountered it seemed reasonable to class them as pricing independently of oligopolistic considerations. Competitive and non-competitive behaviour can be distinguished within oligopolistic markets. Again it is the firms that can be classified. Though typical behaviour may characterise the market to some extent, it is possible to envisage competitive and non-competitive firms coexisting in a given market. The present framework would actually lead to a lowcost market leader setting prices independently of other firms being classed non-competitive, while other firms constrained to follow those prices would be seen as competitive.

A formal questionnaire was not used as it would have made the interviews too rigid, but a list of questions was taken to each firm to form the basis of an informal discussion; this list developed during the course of the study. The interviews took place during the course of 1973. Initially firms were asked what was the general basis of their exportpricing policy. A number of possible labels were offered where no description could be given spontaneously, such as 'same as home price', 'set by market at fixed level', 'whatever the market would bear', 'markup on costs if different from home costs'.

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