In many bargaining situations firms selling products offer what is known as Most

Question

In many bargaining situations firms selling products offer what is known as Most Favored Nation Status (MFN) for their most valued customer. This status means that they are always offered the lowest price it has negotiated with its customers. This means that if the firm offers a lower price to a current customer or a new customer is must lower the price it has negotiated with all it MFN customers. As a customer would you want this clause? How might customers be "hurt" if everyone is offered MFNs.?

Explanation / Answer

As a customer, this clause would be nice. An example of this clause is orbitz new policy. If one books a flight say at $1000 and at any point the price is lowered a refund check will be sent to the consumer. For instance if the flight a month later was sold to someone else for $800, a $200 check would then be mailed to me. Although the discount is nice, some consumers like the pristiuge of the title most valued customer. If everyone were to receive this discount, that title and status would be taken away from the true most valued customers. In this case, they wold not be set apart from the ones who do get discounts.

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.