Fixed margin price undercutting: An adequate entry strategy in a market with switching costs?

Purpose We try to determine the best strategy for entering a market with switching costs that is initially served by a monopolistic incumbent. Findings We show that an offer to undercut the incumbent by a fixed margin (FM) dominates traditional entry with a binding price offer (BO) as this conditional pricing strategy restrains the ability of the incumbent to block entry by limit pricing. Combining FM with a price ceiling (PC) insures customers against future price increases and turns out to be optimal for markets with elastic demand as long as cost uncertainty is not an issue. Conclusion Using a more elaborate entry strategy may facilitate entry in markets with switching costs. However, as these strategies may decrease welfare, they should be closely monitored by antitrust authorities.     

Bargains Followed by Bargains: When Switching Costs Make Markets More Competitive

In markets where consumers have switching costs and firms cannot price‐discriminate, firms have two conflicting strategies. A firm can either offer a low price to attract new consumers and build future market share or a firm can offer a high price to exploit the partial lock‐in of their existing consumers. This paper develops a theory of competition when overlapping generations of consumers have switching costs and firms produce differentiated products. Competition takes place over an infinite horizon with any number of firms. This paper shows that the relationship between the level of switching costs, firms' discount rate, and the number of firms determines whether firms offer low or high prices. Similar to previous duopoly studies, switching costs are likely to facilitate lower (higher) equilibrium prices when switching costs are small (large) or when a firm's discount rate is large (small). Unlike previous studies, this paper demonstrates that the number of firms also determines whether switching costs are pro‐ or anticompetitive, and with a sufficiently large (small) number of firms switching costs are pro‐ (anti‐) competitive.     

Supply-constrained fixed price equilibria in monetary economies

In this paper we consider an economy with restrictions on the relative prices of non-money commodities. The non-money commodities are partitioned into two groups, index makers and price following commodities. Then two cases are considered, namely that the relative prices of the index makers are fixed, respectively free. In both cases the money prices are flexible, whereas the relative prices of the price following commodities are tied to the prices of the index makers. The existence of a supply-constrained equilibrium is proved with (i) no rationing on the money commodities (stores of value), and (ii) at least one non-money commodity is not rationed. If prices of the index makers are fixed the result strengthens a theorem of Dehez and Drèze, if the prices are free a theorem of Kurz is strengthened. This paper is not only concerned with these existence results, but also with the question whether supply-constrained equilibria should appear more frequently than demand-constrained equilibria.     

Concentration of competing retail stores

The geographical concentration of stores that sell similar commodities is analyzed using a two-dimensional spatial competition model. A higher concentration of stores attracts more consumers with taste uncertainty and low price expectations (a market-size effect), while it leads to fiercer price competition (a price-cutting effect). Our model is general enough to allow for the coexistence of multiple (possibly) asymmetric clusters of stores. We provide sufficient conditions for the nonemptiness of equilibrium store location choices in pure strategies. Through numerical examples, we illustrate the trade-off between the market-size and price-cutting effects, and provide agglomeration patterns of stores in special cases.     

Concentration of competing retail stores

The geographical concentration of stores that sell similar commodities is analyzed using a two-dimensional spatial competition model. A higher concentration of stores attracts more consumers with taste uncertainty and low price expectations (a market-size effect), while it leads to fiercer price competition (a price-cutting effect). Our model is general enough to allow for the coexistence of multiple (possibly) asymmetric clusters of stores. We provide sufficient conditions for the nonemptiness of equilibrium store location choices in pure strategies. Through numerical examples, we illustrate the trade-off between the market-size and price-cutting effects, and provide agglomeration patterns of stores in special cases.     

浅谈固定总价合同对承包商的利弊

本文集中就固定总价合同对承包商的利与弊进行了有效的分析与研究,对固定总价合同中的项目承包方的风险与风险控制提出了良好的解决策略,以期对承包商的利益与稳定发展提供良好的意见指导与帮助。     

Incentive pay and rent in oligopoly

Our purpose is to examine strategic delegation in nonlinear Cournot oligopoly. The findings generalize earlier results and show that managerial contracts reward sales under the condition of a fixed input price. Alternatively, under a variable input price, owners might punish sales even when goods are strategic substitutes. We conclude that optimal strategic motivation depends critically on the input price. For example, motivation that supports positive owner profit under a fixed input price nullifies owner-profit if an upstream monopolist with convex costs sets the input price. In a vertical relationship between a duopoly and an upstream monopolist, strategic delegation punishes sales.     

Price-matching policies: An empirical case

Promises by retailers to match the prices of their competitors give an impression of fierce price competition. These policies, however, may deter rivals from cutting prices because the threat of price matching makes it more likely that market share will not be gained. This paper empirically tests these two conflicting theories using data collected from grocery stores in a market where several stores had announced that they would match the prices of the low-price supermarket. The evidence supports the theory that price-matching policies help supermarkets avoid price competition and therefore lead to generally higher prices.     

物流费用对物价的影响研究

目前物价的上涨与物流费用的居高不下有一定的关系,本文通过阐述物流费用的构成,分析物流费用对物价的影响,提出在现阶段降低物流费用,稳定物价的策略措施。     

Random shocks in experimental spot and forward auction markets

Traders face random demand and supply schedules in two experimental auction environments. One is the standard double auction and the other requires sellers to produce and hold inventory before trading. Inventories cannot be held between trading cycles. The endogenous and random cost of inventory disciplines sellers to restrict sales and keep prices relatively high. Anxious buyers may bid up price because total sales cannot exceed inventories. Shocks to the system do not change this behavior except when seller production costs are random. In this treatment, prices converge to the predicted competitive equilibrium. The inventory requirement in all cases increases the earnings of sellers relative to buyers.     

“店选网购”的竞争效应及其反垄断政策涵义

随着互联网和电子商务的发展，消费者在店商试选后以较低价格从网商购买商品的“店选网购”现象非常普遍，厂商或店商经常以其存在搭便车问题为由采取维持转售价格予以限制。本文通过构建具有横向差异化的霍特林模型，考察“店选网购”的竞争效应。研究表明，尽管“店选网购”存在搭便车问题，却能促进店商与网商间的竞争，降低店商和网商的价格和利润，使消费者从中获益，但对社会福利的影响结果是不明确的；其反垄断政策涵义是，“店选网购”具有促进竞争和存在搭便车问题的双重特性，不能简单地作为豁免维持转售价格的正当理由，而应根据实际情况具体分析。     

Pricing To Signal Product Line Quality

This paper offers a general characterization of the optimal product line prices for a monopolist whose quality of products is initially unknown to consumers. In the focal equilibrium, a monopolist signals a high-quality product line by pricing as if quality were known to be high, but costs of production were higher than they truly are. In a rich set of environments, this characterization implies that the prices of all products are initially distorted upward, with the price distortion being largest for products with the most inelastic demands and/or quality-sensitive production costs. These implications yield predictions for the time path of prices flint are broadly consistent with evidence from the marketing literature. The multidimensional signaling problem is made tractable by the satisfaction of a very simple and powerful single crossing property.     

Play It Again,Sam? Versioning in the Market for Second‐hand Video Game Software

Information goods are characterised by high fixed costs and low marginal costs of production. A potentially effective strategy that can be adopted by firms operating in such markets is versioning, whereby various features are added or subtracted from a number of distinct versions of the good. This effectively serves as a means of second‐degree price discrimination designed to extract prices closer to the maximum willingness to pay from different groups of consumers. This study tests the effectiveness of versioning as a means of exploiting differences in willingness to pay in second‐hand markets for information goods by undertaking the first hedonic price analysis of video gaming software. The empirical evidence presented in this paper is based on the analysis of an extensive cross‐sectional dataset consisting of over 5000 observations of pre‐owned video game prices in the USA. Controls are introduced for a variety of other observable characteristics, including the quality of the game‐play experience, the publisher, genre and theme of the game. The results are consistent with theoretical expectations and demonstrate that significant variations in willingness to pay can be exploited through the strategic use of versioning. The practice is therefore argued to represent an effective means by which firms in these markets can enhance revenues. Copyright © 2016 John Wiley & Sons, Ltd.     

Stochastic equilibria of an asset pricing model with heterogeneous beliefs and random dividends

We investigate dynamical properties of a heterogeneous agent model with random dividends and further study the relationship between dynamical properties of the random model and those of the corresponding deterministic skeleton, which is obtained by setting the random dividends as their constant mean value. Based on our recent mathematical results, we prove the existence and stability of random fixed points as the perturbation intensity of random dividends is sufficiently small. Furthermore, we prove that the random fixed points converge almost surely to the corresponding fixed points of the deterministic skeleton as the perturbation intensity tends to zero. Moreover, simulations suggest similar behaviors in the case of more complicated attractors. Therefore, the corresponding deterministic skeleton is a good approximation of the random model with sufficiently small random perturbations of dividends. Given that dividends in real markets are generally very low, it is reasonable and significant to some extent to study the effects of heterogeneous agents’ behaviors on price fluctuations by the corresponding deterministic skeleton of the random model.     

基于库存管理ABC分析的运输与库存整合

运输与库存整合优化是供应链管理中的重要研究课题。论文研究由一个供应商和多个零售商组成的分销系统,在库存实行ABC管理的基础上,零售商采取周期订货策略。在每个零售商处的客户需求是随机的且服从一定的概率分布。我们的目标是在满足给定的客户服务水平的条件下。寻求该供应链运输和库存总费用的最小化。通过对库存水平及它们与客户随机需求变量之间的关系分析,得到最优的订货策略。     

Full fixed cost recovery lot sizing with quantity discounts

Purchasers must often make lot sizing decisions when facing price schedules of price-quantity discounts. It is important to determine the supplier's pricing philosophy when establishing a solution procedure.One approach is to evaluate total costs at all of the appropriate break points. This offers limited information: a lot size and a set of total costs. This is especially true in the case of full fixed cost recovery pricing. In actual practice price schedules can be extremely lengthy: indeed, it may be in the supplier's best interests to offer comprehensive discount schedules. This situation complicates the purchaser's decision making process.An efficient alternative, which solves the price-quantity discount problem when the supplier insists on a full fixed cost recovery schedule, is presented. Computations are reduced to a few simple steps; the result is a least total cost lot size for a simple linear package price model given parameters obtained by an appropriate analysis of the supplier's price-quantity discount schedule. A starting point is determined and the choice of the lot size is made using a simple criterion. Rapid convergence is assured, given a reasonably well-behaved schedule.     

Second‐Price Auctions with Different Participation Costs

This paper studies equilibria of second‐price auctions in independent private value environments with different participation costs. Two types of equilibria are identified: monotonic equilibria in which a bidder with a lower participation cost results in a lower cutoff for submitting a bid, and nonmonotonic equilibria in which a lower participation cost results in a higher cutoff. We show that there always exists a monotonic equilibrium, and further, that the monotonic equilibrium is unique for either concave distribution functions or strictly convex distribution functions with nonincreasing reverse hazard rates. There exist nonmonotonic equilibria when the distribution functions are strictly convex and the difference of the participation costs is sufficiently small. We also provide comparative static analysis and study the limiting properties of equilibria when the difference in bidders’ participation costs approaches zero.     

The Determinants of Price Adjustments in Retail Supermarkets

This paper examines the determinants of price adjustment decisions by supermarkets to increase or decrease prices for 11 different food categories and evaluates the characteristics of these firms that influence these decisions. We use a unique dataset to analyze firm variables and industry variables and their impact on price adjustment in supermarket stores. The study contributes to the price adjustment literature by identifying determinants of price behavior by stores and product category. We find that the rationale for increasing prices differs from that for decreasing prices, retailers make different adjustment decisions based on product category, and market‐level controls have little impact. Copyright © 2015 John Wiley & Sons, Ltd.     

中国移动通信市场价格博弈影响因素分析及对策

价格竞争作为一种信号传递机制,体现了市场主体之间相互学习并调整各自行动,根据变化的条件和环境采取有效率的行为。本文基于中国移动通信市场价格博弈本质解析的基础上,分析了不对称管制、经济租金、转移成本和产品差异化等要素对中国移动通信市场价格博弈的影响机制,提出了增进中国移动通信市场有效竞争程度以及缓解行业价格博弈的若干对策建议。     

Production location and random input price

The purpose of this paper is to develop systematically the theory of plant location for a competitive firm facing random input price. It will be shown that the impact of input price uncertainty on the firm's optimum location depend crucially upon (i) the firm's attitude toward risk, (ii) the characteristics of the production function, (iii) the structure of transport costs on inputs and output, and (iv) the type of input usages. Moreover, and more importantly, some conclusions obtained by prior studies on location theory in a certainty world can also be shown to be special cases of our more general results, but some are not justifiable in a world with random input price.