Pricing Strategies in a Dynamic Duopoly PDF Download
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Author: Pradeep K. Chintagunta
Publisher:
ISBN:
Category : Duopolies
Languages : en
Pages : 39
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Book Description
Author: Pradeep K. Chintagunta
Publisher:
ISBN:
Category : Duopolies
Languages : en
Pages : 39
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Book Description
Author: Yuko Minowa
Publisher:
ISBN:
Category :
Languages : en
Pages : 242
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Book Description
Author: Sheng C. Hu
Publisher:
ISBN:
Category :
Languages : en
Pages : 60
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Book Description
Author: Claudia Keser
Publisher: Springer Science & Business Media
ISBN: 3642481442
Category : Business & Economics
Languages : en
Pages : 162
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Book Description
This report portrays the results of experimental research on dynamic duopoly markets with demand inertia. Two methods of experimentation are studied: game-playing experiments where subjects interact spontaneously via computer terminals, and computer tournaments between strategies designed by subjects. The principal aim of this study is the understanding of boundedly rational decision making in the dynamic duopoly situation. 1. 1 Motivation The experiments examine a multistage duopoly game where prices in each period are the only decision variables. Sales depend on current prices and also on past sales (demand inertia). Applying the game-theoretic concept of subgame perfect equilibrium, the game is solved by backward induction. The result is a uniquely determined system of decision rules. However, we can hardly expect that human beings behave according to the equilibrium strategy of this game. It is unlikely that subjects are able to compute the equilibrium. And even if a subject is able to compute it, he might not make use of this knowledge. Only if he expects the others to behave according to the equilibrium, it is optimal for him to play the equilibrium strategy. We have evidence from several earlier experimental studies on oligopoly markets that, even in less complex oligopoly situations where the equilibrium solutions are very easy to compute, human behavior often is different from what is prescribed by normative theory. ! Normative theory is based on the concept of ideal rationality. However, human capabilities impose cognitive limits on rationality.
Author: Byoung Jun
Publisher:
ISBN:
Category : Differential games
Languages : en
Pages : 54
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Book Description
Author: Eunsang Yoon
Publisher:
ISBN:
Category : New products
Languages : en
Pages : 32
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Book Description
Author: Frank M. Bass (deceased)
Publisher:
ISBN:
Category :
Languages : en
Pages : 37
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Book Description
To increase the sales of their products through advertising, firms must integrate their brand-advertising strategy for capturing market share from competitors and their generic-advertising strategy for increasing primary demand for the category. This paper examines whether, when, and how much brand advertising versus generic advertising should be done. Using differential game theory, optimal advertising decisions are obtained for a dynamic duopoly with symmetric or asymmetric competitors. We show how advertising depends on the cost and effectiveness of each type of advertising for each firm, the allocation of market expansion benefits, and the profit margins determined endogenously from price competition. We find that generic advertising is proportionally more important in the short term and that there are free-riding effects leading to suboptimal industry expenditure on generic advertising that worsen as firms become more symmetric. Due to free-riding by the weaker firm, its instantaneous profit and market share can actually be higher. The effectiveness of generic advertising and the allocation of its benefits, however, have little effect on the long-run market shares, which are determined by brand-advertising effectiveness. Extensions of the model show that market potential saturation leads to a decline in generic advertising over time.
Author: Rainer Schlosser
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
In many applications the sale of perishable products is characterized by competitive settings, e.g. the airline industry. While prices of sellers are typically observable, the inventory levels of firms are mutually not observable. We analyze stochastic dynamic pricing models in a finite horizon duopoly with partial information. Based on the feedback pricing strategies that are optimal for case in which the competitor's inventory level is observable, we use a Hidden Markov Model approach to compute strategies that are applicable when the competitor's inventory level is not observable. We show that price reactions are balancing two effects: (i) to slightly undercut the competitor's price to sell more items, and (ii) to use high prices to promote a competitor's run-out and to act as a monopolist for the rest of the time horizon. Moreover, we compute heuristic strategies that can be applied when the number of competitors is large and their strategies are not known. We find that expected profits are hardly affected by different information structures as long as the firms' information is symmetric.
Author: Birger Wernerfelt
Publisher:
ISBN:
Category :
Languages : en
Pages : 16
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Book Description
Author: Robin A. Mason
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
This paper provides a characterization of the set of dynamic models in which symmetric duopolists have incentives to raise a common cost. The advantage of the dynamic analysis over existing static models is that it extends the conditions (restrictive in static models) under which symmetric cost raising is profitable. The model is illustrated by standard examples from industrial organization: quantity and price adjustment, and learning-by-doing.
