Download or read book Prices as signals of quality in duopoly written by Mark N. Hertzendorf and published by . This book was released on 2001 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Price Signaling in a Two Market Duopoly written by Matthew Hughes (Donald) and published by . This book was released on 2016 with total page 86 pages. Available in PDF, EPUB and Kindle. Book excerpt: Within any industry, firms typically produce related products over multiple subsequent periods in an attempt to build consumer loyalty and achieve continued sales. Apple releases new iPhones and car companies produce new models every year, relying on consumers believing each new product is of high quality. Firms rely on the spillover effects from previous markets, where firms are able to more easily demonstrate their product's quality to the consumers before purchase. The goal is to find a range of prices which allows the high quality firm to distinguish its type to consumers via the price pH and if spillover effects in subsequent markets can occur. We look at a duopoly of two firms, of high and low qualities, where each firm produces a product in an initial market and a second, related product in a subsequent market. Using each firm's expected profits, based on Bayesian probabilities, we analyze a firm's mimicking strategy to find the range of pH that allows for a separating equilibrium and spillover effects. In a second market where firms are the same qualities as in the first market, the high quality firm experiences spillover effects and can signal its quality with a lower price than in the first market. When firms change qualities in the second market, no spillover effect occurs and the newly high quality firm must increase pH from the previous market in order to separate.
Download or read book Competition and Confidentiality written by Andrew F. Daughety and published by . This book was released on 2004 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: How does the need to signal quality through price affect equilibrium pricing and profits, when a firm faces a similarly-situated rival? In this paper, we provide a model of non-cooperative signaling by two firms that compete over a continuum of consumers. We assume "universal incomplete information;" that is, each market participant has some private information: each consumer has private information about the intensity of her preferences for the firms' respective products and each firm has private information about its own product's quality. We characterize a symmetric separating equilibrium in which each firm's price reveals its respective product quality. We focus mainly on a model in which the quality attribute is safety (so that the legal system is brought into play) and quality is unobservable due to the use of confidential settlements; a particular specification of parameters yields a common model from the industrial organization literature in which quality is interpreted as the probability that a consumer will find the good satisfactory. We show that the equilibrium prices, the difference between those prices, the associated outputs, and profits are all increasing functions of the ex ante probability of high safety. When quality is interpreted as consumer satisfaction, unobservable quality causes all prices to be distorted upward, and lowers average quality and ex ante expected social welfare, but increases ex ante expected firm profits (when either the probability of high quality or the extent of horizontal product differentiation is sufficiently high). When quality is interpreted as product safety, the foregoing results are modified in that for some parameter values ex ante expected social welfare is higher under confidentiality because such legal secrecy lowers expected litigation costs.
Download or read book Price competition with information disparities in a vertically differentiated duopoly written by Alberto Cavaliere and published by . This book was released on 2004 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Advertising and Price Signaling of Quality in a Duopoly with Endogenous Locations written by Philippe Bontems and published by . This book was released on 2005 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Price Competition and Advertising Signals written by Federal Trade Federal Trade Commission and published by CreateSpace. This book was released on 2015-06-01 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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 existence of separating equilibria. Two simple, but non-standard, equilibrium refinements are introduced to deal with the multi-sender 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, depending on the differentiation, the separating prices of both firms may be distorted upwards or downwards compared to the complete information benchmark.
Download or read book Price Competition and Advertising Signals written by Federal Trade Federal Trade Commission and published by Createspace Independent Publishing Platform. This book was released on 2016-04-05 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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 existence of separating equilibria. Two simple, but non-standard, equilibrium refinements are introduced to deal with the multi-sender 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, depending on the differentiation, the separating prices of both firms may be distorted upwards or downwards compared to the complete information benchmark.
Download or read book Prices as Signals of Quality written by Carla Guadalupi and published by . This book was released on 2015 with total page 79 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the optimal pricing strategy for newly introduced experience goods in a two-period monopoly market with experimentation and private information about quality. Consumers learn about quality through price signaling and experimentation, and communicate their ndings to other buyers via word of mouth. We show the existence of a unique separating equilibrium that satis es the intuitive criterion. In this equilibrium, a high-quality seller signals high quality through a low introductory price that rises in the next period (after experimentation has occurred), while a low-quality one charges a high introductory price, which declines over time because the revealed information is likely to be bad. This result helps explain recent empirical evidence and case studies on the introductory pricing strategies of rms entering foreign product markets.
Download or read book dynamic pricing of durables in duopoly the effect of buyer expectations written by rabikar chatterjee and peter crosbie and published by . This book was released on 1992 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Signaling Quality in an Oligopoly When Some Consumers are Informed written by Yaron Yehezkel and published by . This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Download or read book Market Coverage and the Existence of Equilibrium in a Vertically Differentiated Duopoly written by and published by . This book was released on 1998 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The existence of a pure-strategy subgame perfect equilibrium in qualities and prices is investigated in a duopoly model of vertical differentiation where quality improvements require a quadratic variable cost. The alternative cases of partial and full market coverage are considered. It is shown that there exists a parameter range where the incentive to decrease differentiation arises for the high-quality firm, preventing firms to reach a pure-strategy duopoly equilibrium.
Download or read book Price Equilibrium and Willingness to Pay in a Vertically Differentiated Mixed Duopoly written by Corrado Benassi and published by . This book was released on 2016 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the framework of a vertically differentiated mixed duopoly, with uncovered market and costless quality choice, we study the existence of a price equilibrium when a welfare-maximizing public firm producing low quality goods competes against a profit-maximizing private firm producing high quality goods. We show that a price equilibrium exists if the quality spectrum is wide enough vis à vis a measure of the convexity of the distribution of the consumers' willingness to pay, and that such equilibrium is unique if this sufficient condition is tightened. Log-concavity of the income distribution is inconsistent with the existence of equilibrium.
Download or read book The Amazing Geometry of Price Competition with Quality Dependent Production Costs written by Cesaltina Pires and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper explores in detail a price game with two potential competitors who sell products with different qualities and where unit production costs are increasing with quality. Depending on the quality combinations, many types of price equilibria configurations may exist, besides the classical cases of high-quality monopoly or duopoly with partial or full coverage. In accordance with previous results, there exists a duopoly corner solution. But we also show that there are quality combinations where the monopolist is the low-quality firm, and this firm may or not be constrained by the presence of the other competitor. We determine, in a general setup concerning firms' marginal cost and quality valuation dispersion, the parameter combinations under which each price Nash equilibrium holds and show graphically the different market regions for different values of the valuation parameter, which reveals an amazing geometry. Besides providing a full characterization of the different market configurations, our findings are the backbone of future analysis of quality choices and may be relevant both for firms and policy makers.
Download or read book Quality Choice Trade Policy and Firm Incentives written by Federal Trade Federal Trade Commission and published by CreateSpace. This book was released on 2015-06-07 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine quality choice in a duopoly model with one foreign and one domestic firm. where consumers show similar preferences for quality but different preferences for brands. Firms set quality prior to choosing price; and. the interaction between firms and policymakers assumes several forms. Our conclusions differ depending on whether firms face "set-up" costs in establishing higher quality levels. When these costs are absent, both domestic and foreign firms typically set quality at socially optimal levels. When these costs are present. the foreign firm [and often the domestic firm] sets quality below the socially optimal level. These results change when firms use their quality choices to signal cost information to policymakers or rivals.
Download or read book Oligopoly Pricing written by Xavier Vives and published by MIT Press (MA). This book was released on 1999 with total page 446 pages. Available in PDF, EPUB and Kindle. Book excerpt: Applies a modern game-theoretic approach to develop a theory of oligopoly pricing. The text relates classic contributions to the field of modern game theory and discusses basic game-theoretic tools and equilibrium, paying particular attention to developments in the theory of supermodular games.
Download or read book Price Theory and Applications written by Jack Hirshleifer and published by Cambridge University Press. This book was released on 2005-09-12 with total page 638 pages. Available in PDF, EPUB and Kindle. Book excerpt: This seventh edition of the book offers extensive discussion of information, uncertainty, and game theory.
Download or read book Journal of Institutional and Theoretical Economics written by and published by . This book was released on 2008 with total page 846 pages. Available in PDF, EPUB and Kindle. Book excerpt:
