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1.
Carla Guadalupi 《Journal of Economics & Management Strategy》2018,27(1):53-70
This paper studies the effect of word‐of‐mouth communication on the optimal pricing strategy for new experience goods. I consider a dynamic monopoly model with asymmetric information about product quality, in which consumers learn in equilibrium from both prices and other consumers. The main result is that word‐of‐mouth communication is essential for the existence of separating equilibria, wherein the high‐quality monopolist signals high quality through a low introductory price (lower than the monopoly price), and the low‐quality one charges the monopoly price. The intuition is simple: low prices are costly, and will only be used by firms confident enough that increased experimentation (and therefore communication among consumers) will yield good news about quality and increased future profits. Additional results are the following: for the high‐quality seller, the expected price (quantity) is increasing (decreasing) over time; whereas for the low‐quality one, the opposite is true. Moreover, signaling becomes more difficult when consumers pay less attention to their peers' reports and more attention to past prices. Finally, word‐of‐mouth communication improves consumer welfare. 相似文献
2.
This paper examines the existence and characteristics of pure-strategy Nash equilibria in oligopoly models in which firms simultaneously set prices and quantities. Existence of a pure-strategy equilibrium is proved for a class of price–quantity games. If the demand function is continuous, then the equilibrium outcome is similar to that of a price-only model. With discontinuous demand and limited spillover, there are rationing equilibria in which combined production falls short of market demand. Moreover, there might again be an equilibrium reflecting the outcome of a price game. Competition in price and quantity thus yields Bertrand outcomes under a variety of market conditions. 相似文献
3.
《Regional Science and Urban Economics》1987,17(3):441-449
A Hotelling-type model of spatial competition is considered, in which two firms compete in uniform delivered prices. First, it is shown that there exists no uniform delivered price–location equilibrium when the product sold by the firms is perfectly homogeneous andwhen consumers buy from the firm quoting the lower delivered price. Second, when the product is heterogeneous and when preferences are identically, independently Weibull-distributed with standard deviation μ, we prove that there exists a single uniform delivered price–location equilibrium iff μ≧1/8 times the transportation rate times the size of the market. In equilibrium, firms are located at the center of the market and charge the same uniform delivered price, which equals their average transportation cost, plus a mark-up of 2μ. Finally, we discuss how our result extends to the case of n firms and proceed to a comparison of equilibria under uniform mill and delivered pricing. 相似文献
4.
The paper fully characterizes the Bertrand equilibria of oligopolistic markets where consumers may ignore the last (i.e., the right-most) digits of prices. Consumers, in this model, do not do this reflexively or out of irrationality, but only when they expect the time cost of acquiring full cognizance of the exact price to exceed the expected loss caused by the slightly erroneous amounts that are likely to be purchased or the slightly higher price that may be paid by virtue of ignoring the information concerning the last digits of prices. It is shown that in this setting there will always exist firms that set prices that end in nine though there may also be some (nonstrict) equilibria where a non-nine price ending occurs. It is shown that all firms earn positive profits even in Bertrand equilibria. The model helps us understand in what kinds of markets we are most likely to encounter pricing in the nines. 相似文献
5.
Carlo Reggiani 《Journal of Economics & Management Strategy》2014,23(3):628-649
The spokes model allows to address nonlocalized spatial competition between firms. In a spatial context, firms can price discriminate using location‐contingent pricing. Nonlocalized competition implies that neighboring effects are not relevant to firms. This paper analyzes spatial price discrimination and location choices in the spokes model. Highly asymmetric location patterns are one outcome if the number of firms is sufficiently high: in that case, one firm supplies a generally appealing product whereas others focus on a specific niche. Moreover, multiple equilibria arise for intermediate values of the number of firms. In this case, the location patterns do not always globally minimize the sum of transport costs: asymmetric configurations distribute more efficiently the cost between firms. 相似文献
6.
David P. Baron 《Journal of Economics & Management Strategy》2020,29(3):635-662
This paper presents an infinite horizon dynamic model in which two firms compete in a market vertically differentiated by the qualities of their products and consumers have heterogeneous preferences for quality. Given the product qualities offered, the firms engage in price competition that segments the market. In each period each firm can spend on product innovation that if successful increases the quality of its product. Three types of Markov perfect equilibria are identified. A running–coasting equilibrium exhibits increasing quality dominance with one firm undertaking innovation and the other coasting to free ride on the innovation by the first firm. The firm that coasts can have the larger dynamic payoff, so quality dominance does not imply payoff dominance. A second is a leap‐frog equilibrium in which the trailing firm undertakes innovation to leap into the lead. The trailing firm never innovates solely to narrow the gap with the leader, so catch up strategies are never used. In the third both firms undertake innovation, but if both have innovation successes, product differentiation remains the same and profits are reduced by the cost of innovation. The rivalry between Intel and AMD in microprocessors for personal computers provides a motivating example. 相似文献
7.
Revealing Incentives for Compatibility Provision in Vertically Differentiated Network Industries
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We determine the incentives for compatibility provision of firms that produce network goods with different intrinsic qualities when firms do not have veto power over compatibility. When network effects are strong, there are multiple equilibria in pricing and consumer decisions. We show that in some equilibria, it is the high‐quality firm that invests in compatibility, whereas in others, the low‐quality firm triggers compatibility. The socially optimal compatibility degree is zero, except under very strong network effects, where one of the equilibria has all consumers buying the low‐quality good. In this case, a partial degree of compatibility is optimal. 相似文献
8.
We study firms that supply a vertically and horizontally differentiated service in a market with regulated prices. The incentives for seeking accreditation are more significant for sellers of below-average quality services relative to sellers of above-average quality services. For homogenous firms, profits are lower in equilibria where both firms seek accreditation relatively to equilibria where neither does. Private and social accreditation incentives typically differ. The welfare optimal reimbursement rate is independent of a firm's actual accreditation decision but dependent on the accreditation decision of the rival. Hence, policies that give extra financial support to firms that accredit are likely to promote inefficiency. 相似文献
9.
For a homogeneous product oligopoly market, possibilities for pure strategy Nash equilibria in prices are studied. Consumers, who each nonstrategically purchase one unit up to a common reservation price, are hypothesized to be more concerned with large price differences (and therefore buy from the cheapest firm) than slightly different prices. For the duopoly case, existence, uniqueness, and characterization results are provided. Linear examples are given with 2 and n firms. 相似文献
10.
Mark N. Hertzendorf Per Baltzer Overgaard 《Journal of Economics & Management Strategy》2001,10(4):621-662
Can price and advertising be used by vertically differentiated duopolists to signal qualities to consumers? We show that pure price separation is impossible if the vertical differentiation is small, while adding dissipative advertising ensures the existence of separating equilibria. Two simple, but nonstandard, equilibrium refinements are introduced to deal with the multisender nature of the game, and they are shown to produce a unique separating and a unique pooling profile. Pooling results in a zero‐profit Bertrand outcome. Separation gives strictly positive duopoly profits, and dissipative advertising is used by the high‐quality firm when products are sufficiently close substitutes. Finally, compared to the complete‐information benchmark, the separating prices of both firms are distorted upwards when the degree of vertical differentiation is large, and downwards when it is small. 相似文献
11.
《Regional Science and Urban Economics》1988,18(1):87-124
Although most existing models of spatial agglomeration rely on the concept of external economies, this paper demonstrates that pure market processes based on price interactions alone can generate spatial agglomeration of economic activities. To this end, a spatial version of the Chamberlinian monopolistic competition model is developed, in which a continuum of firms supply a continuum of differentiated goods to homogeneous households in a linear city. The monopolistic equilibria are compared with the first-best and second-best solutions. 相似文献
12.
This paper addresses Bertrand-type pricing competition between two firms producing partially differentiated durables over a finite planning horizon. The demand for durables, characterized by increasing returns of scale to a price reduction, is led by the hazard rate. While the effect of inventories on pricing of non-durables is widely recognized, the management and marketing literature typically overlooks this effect in regard to horizontally competing firms for durables. In this paper we show that the pricing trajectory of durables may significantly alter when inventory dynamics are accounted for. In particular, the price may hike upwards before dropping; gradually grow; or even stay at the same level over the entire product life while it would only decline if inventories and related costs are disregarded. Furthermore, the well-known, optimal pricing strategy of following the pattern of sales does not necessarily confirm even for symmetric equilibria when the competing firms have either an inventory surplus or shortage. 相似文献
13.
Gian Luigi Albano Berardino Cesi Alberto Iozzi 《Journal of Economics & Management Strategy》2023,32(2):377-399
This paper shows that, in a repeated competitive procurement, a buyer can use the reserve price in a low-price auction as a “public”—hence nondiscriminatory—incentive device to elicit unverifiable quality. We study a model with many firms and one buyer, who is imperfectly informed on the firms' costs. When firms are ex ante identical, the provision of quality is sustained by a sufficiently high reserve price to reward firms for the quality provision and by the threat of setting a low reserve price forever, if quality is not delivered. The buyer can elicit the desired level of unverifiable quality provided her baseline valuation of the project is not too high and the net benefit from unverifiable quality is not too low. These results are robust to firms' heterogeneity in their time preferences when the punishment for a deviation is finite but sufficiently long. 相似文献
14.
Yaron Yehezkel 《Journal of Economics & Management Strategy》2008,17(4):937-972
This paper considers a signaling game between two competing firms and consumers. The firms have common private information concerning their qualities, and some of the consumers are informed about the firms' qualities. Firms use prices and uninformative advertising as signals of quality. The model reveals that in the separating equilibrium, prices are first climbing and then declining with the proportion of informed consumers, while the expenditure on uninformative advertising is declining. Firms' profits are highest when the proportion of informed consumers is at an intermediate level. Pooling equilibria exist if the proportion of informed consumers is below a certain threshold. 相似文献
15.
Nonlinear Pricing and Oligopoly 总被引:8,自引:0,他引:8
We consider the general problem of price discrimination with nonlinear pricing in an oligopoly setting where firms are spatially differentiated. We characterize the nature of optimal pricing schedules, which in turn depends importantly upon the type of private information the customer possesses–either horizontal uncertainty regarding brand preference or vertical uncertainty regarding quality preference. We show that as competition increases, the resulting quality distortions decrease, as well as price and quality dispersions. Additionally, we indicate conditions under which price discrimination may raise social welfare by increasing consumer surplus through encouraging greater entry. 相似文献
16.
Hiroshi Kitamura Noriaki Matsushima Misato Sato 《Journal of Economics & Management Strategy》2023,32(1):158-176
We explore the supply chain problem of a downstream durable goods monopolist, who chooses one of the following trading modes: an exclusive supply chain with an incumbent supplier or an open supply chain, allowing the monopolist to trade with a new efficient entrant in the future. The expected retail price reduction in the future dampens the profitability of the original firms. An efficient entrant's entry magnifies such a price reduction, causing a further reduction of original firms' joint profits. In equilibrium, the downstream monopolist chooses the exclusive supply chain to escape further price reductions, although it expects efficient entry. 相似文献
17.
Peter A. Zadrozny 《Economics of Planning》1997,30(2-3):221-238
Rational expectations modelling has been criticized for assuming that economic agents can learn quickly about and compute
rational price expectations. In response, various authors have studied theoretical models in which economic agents use adaptive
statistical rules to develop price expectations. A goal of this literature has been to compare resulting learning equilibria
with rational expectations equilibria. The lack of empirical analysis in this literature suggests that adaptive learning makes
otherwise linear dynamic models nonlinearly intractable for current econometric technology. In response to the lack of empirical
work in this literature, this paper applies to post-1989 monthly data for Poland a new method for modelling learning about
price expectations. The key idea of the method is to modify Cagan’s backward-looking adaptive-expectations hypothesis about
the way expectations are actually updated to a forward-looking characterization which instead specifies the result of learning.
It says that, whatever the details of how learning actually takes places, price expectations are expected to converge geometrically
to rationality. The method is tractable because it involves linear dynamics. The paper contributes substantively by analyzing
the recent Polish inflation, theoretically by characterizing learning, and econometrically by using learning as a restriction
for identifying (i.e., estimating wth finite variance) unobserved price expectations with the Kalman filter.
This revised version was published online in July 2006 with corrections to the Cover Date. 相似文献
18.
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. 相似文献
19.
This paper systematically examines the factors that determine price discounts and announcement effects of equity private placements conducted by firms in Taiwan from 2002 to 2008. Different with most studies of private placements using available observations as a whole sample, our study separates the whole sample into subsamples by exchange-listed firms and OTC firms. The results for OTC firms corroborate the information hypothesis; the discounts serve as compensation for investor's costs of assessing firms, while abnormal returns reflect the information about firm quality. On the other hand, the empirical results show that some of our findings support an information explanation and some support a monitoring explanation in the case of exchange-listed firms. It seems that there are different motives behind the exchange-listed firms placing equity privately. 相似文献
20.
We consider a duopoly market with heterogeneous consumers. The firms initially produce vertically differentiated standard products located at the end points of the variety interval. Customization provides ideal varieties for consumers but has no effect on quality. The firms first choose whether to customize their products, then engage in price competition. We show that the low‐quality firm never customizes alone; customization becomes more likely as the difference between the firms’ qualities increases; and less likely as the fixed cost of customization increases. We extend the base model by relaxing two important assumptions—uniform pricing and exogenous quality. The main conclusions with uniform pricing continue to hold when price customization is allowed. In the second extension the firms’ qualities are endogenously determined. We show that the firms choose to be either substantially differentiated in quality or nondifferentiated. 相似文献