Comments on “Multinational Corporate Pricing Policy in the Developing Countries”

Abstract

These comments are in reference to Nathaniel Leff's article entitled “Multinational Corporate Pricing Strategy in the Developing Countries.”

Professor Leff suggests that marketing executives should reduce the price of a company's products in order to earn higher profits. In defense of this seemingly trivial suggestion, Professor Leff claims that “there are special reasons why a strategic pricing policy along these lines might be expected to have particularly fruitful effects in the conditions of the less-developed countries”. He adduces that in these countries, the multinational firms underestimate the price-elasticity of demand and hence set prices that are higher than the profit maximizing prices. He offers four reasons for this behavior: