a basic idea of price-offer matching clauses

Vince-

Here is the basic idea I was alluding to:

Suppose a car dealer promised to "match any advertised price." Then his
competitor would feel the need to respond in kind. And so on, until all
dealers advertised they would "match any advertised price." Now, consider one
of these dealer's decision to perhaps lower his prices. If he does so,
everyone will immediately match his price, so his market share will remain
unchanged, at whatever it was before, but his revenues (and all other dealers
as well) would be lowered by the amount of his price reduction. So, the
dealer rationally decides not to lower his prices to try to sell more cars.

Now, suppose a limited partnership, where the partners contract to "control"
who they are in business with, by putting a "right of first refusal" clause
into the partnership's papers, whereby any partner wishing to sell his
interests must offer the remaining partners the right to match any offer the
partner received from outside for his shares. Now, suppose you are an
outsider, considering doing your due diligence in the thought you might want
to buy into the partnership. You know if your offer is a "good" one from your
perspective, offering you the prospects of a fair rate of return, the
existing partners will match it, and you will get nothing in the deal but you
will have paid, from your own pocket, for your due diligence. Conversely, if
you offer too much for the shares, then the other partners will not match
your offer and you will then realize you overpaid. In neither case can you
credibly assume you know more about the business than do the current
partners. So, you (basically) don't make an offer. So, a partner's shares
are seriously devalued by his partners having the right to match any offers
he receives for them. The "right of first refusal" clause precludes
economically efficient rebalancing of portfolios by rendering the shares
(essentially) illiquid.

Clayton