Rebates in a Bertrand game |
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| Authors: | Nora Szech Philipp Weinschenk |
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| Institution: | 1. Department of Economics, University of Bamberg, Feldkirchenstr. 21, 96052 Bamberg, Germany;2. Bonn Graduate School of Economics and Max Planck Institute for Research on Collective Goods, Kurt-Schumacher-Str. 10, 53113 Bonn, Germany |
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| Abstract: | We study a price competition game in which customers are heterogeneous in the rebates they get from either of two firms. We characterize the transition between competitive pricing (without rebates), mixed strategy equilibrium (for intermediate rebates), and monopoly pricing (for larger rebates). |
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| Keywords: | Rebates Price competition Bertrand paradox Golden ratio Market segmentation |
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