Final answer:
Blank pricing occurs in markets with inelastic demand, common in oligopolistic industries where firms match price cuts but not price increases, leading to a kinked demand curve effect.
Step-by-step explanation:
The question refers to a situation where a company's pricing strategy in one national market affects how a competitor prices its products in another national market. This implies the presence of a kinked demand curve typical in an oligopoly market structure. In such cases, the competing firms may agree to match price cuts but not price increases. This type of pricing exists when there is inelastic demand, meaning that a change in price does not significantly affect the quantity demanded because the products are typically seen as necessities or have few close substitutes.
The kinked demand curve explains why in oligopolistic markets, firms may experience a low increase in quantity sold even with price reductions, as competitors will match price cuts, thus negating the potential for gaining market share through lower prices.