114 GEORGE A. HAY communications that had been at the heart of the original conspiracy. Vigorous price competition apparently prevailed in the industry from 1960 into 1963. By 1962, Allis-Chalmers had withdrawn from the market but there was still substantial overcapacity and prices continued to decline. Relatively few sales are made in any year and the pressure to obtain any given order was substantial. Moreover, the product was not homogeneous and, although price books were used, there was little adherence to published prices and considerable discounting occurred on particular projects. However, in 1963 there was an important set of developments that, in the Department’s opinion, resulted in a sudden and dramatic reduction in the degree of competition. Speciﬁcally, in May 1963, GE announced a new pricing policy which featured GE’s intention to adhere to published prices on all future transactions. The revised policy had a number of elements designed to facilitate the success of the new pol- icy. A key element was a revised price book which contained simpliﬁed formulas and procedures for determining the book price of any given turbine generator and a published multiplier to be applied to book prices at any given time so as to
Review of Industrial Organization – Springer Journals
Published: Oct 16, 2004
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