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| Definition: |
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Reciprocity is a form of bilateral (or multilateral) arrangement between firms to bestow favourable terms on, or buy and sell from, each other to the exclusion of others. This may have the effect of limiting competition and/or preventing the entry of firms into certain markets.
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| Context: |
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Concern about reciprocal arrangements has been particularly raised in the context of conglomerates. It is argued that subsidiary firms are likely to encounter each other frequently as buyers or sellers in different markets. Reciprocity may benefit firms by ensuring contract fulfilment or by facilitating secret price-cutting.
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| Source
Publication: |
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Glossary of Industrial Organisation Economics and Competition Law, compiled by R. S. Khemani and D. M. Shapiro, commissioned by the Directorate for Financial, Fiscal and Enterprise Affairs, OECD, 1993.
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| Statistical
Theme: Financial statistics |
| Created
on Thursday, January 3, 2002 |
| Last
updated on Wednesday, January 4, 2006 |
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