Competition under oligopoly: the Hoover free flight promotion

The market for domestic electrical appliances such as washing machines is characterised by oligopoly, and firms in this market may provide free gifts to sell their products. Hoover offered free air travel to counter recession and the static nature of the white goods market. A drop in price might result in a price war, so free gifts tend to be preferred. Hoover had to increase production to meet the boost in demand, and underestimated the number of claims for air tickets. There may have been a loss of confidence in Hoover over the long term due to problems it had in meeting demand for flights.