"Industrial Gases: Pressure Builds in Recession" and 'The Middle East: Natural Advantages Fuel Increasing Investment", Financial Times Special Section: The Business of Chemicals, October 14 2002.
First article: As we learned in class, one potential advantage of servicing is that it provides a means to meter customer consumption and hence to price disriminate through a two-part tariff. Is this feature important, do you think, to industrial gas providers, say, supplying bars and clubs?
[Categories: Price Discrimination]
Second article: Apparently, the Middle East commitment to expand capacity has deterred others from expanding. Can we conclude, then, that expected future gas prices given the Middle Eastern expansion are lower than what would be necessary to justify present investment by other, higher cost producers? What if the Middle East had a smaller cost advantage? Could they still deter expansion by others in the face of expected high future prices?
[Categories: Costs, Game Theory]
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