to consider some concession on their side if
the_supplier reduces the price by this margin
(x). "Surround the enemy" stage.
(c) The seller is given no sign of the value
of any subsequent Chinese concession even
if you break out of the "one avenue of escape",
you are still surrounded.
(d) So the company will make only a partial
concession in the direction of this margin (X).
Say, 30%. The Chinese response will be that
because a full concession was not made, they
will allow half - 15%. The difference is now
$$% of X. The Chinese will move again half
of the concession made by the seller.
Asymptotic to 66% concession in the Chinese
favour. Hence a constant "come on" to try to
settle near 50%, with no guarantee that the
Chinese will make a similar concession.
(e) Chinese contribution: with a new "basic
price", and still a "gap", the Chinese may agree to give up some of their "options".
at the value of the original basic price ie
three options of 10% of X each, gives the
Chinese a further advantage of 10% in terms
of the new base price.
But
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