Pricing and Forecasting in an Oligopoly Firm
Coauthor(s): John Farley, James Hulbert.
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This research paper presents an in-depth study of two systems developed by a British oligopolist—one system for sales volume forecasting, the other system for day-to-day decisions on pricing. The paper describes two decision systems employed by a firm in an industry characterized as undifferentiated oligopoly; the development of terms of trade to suit market conditions and of short-term expectations with regard to volumes. The competitive situation in such industries requires that the firm organize carefully, both with regard to its planning processes and with regard to procedures which allow for adjustments to permit temporary deviation from previously developed plan. A study was performed in the fabricating division of the company, whose products were intermediate goods and were sold to producers of other products, not consumers. These products, which fall into two broad categories (X and Y), were sold directly into three broad end-use markets; industrial, transport and building, and indirectly through stockists. A successful oligopolist must be able to understand the complexities of his environment to enable `good' forecasts of the future to be made.
In the short run the oligopolist is concerned with decisions about individual potential orders which occur on a daily basis.
Source: Journal of Management Studies
Capon, Noel, Johh Farley, and James Hulbert. "Pricing and Forecasting in an Oligopoly Firm." Journal of Management Studies 12 (1975): 133-56.