Experimentation and Learning in a Differentiated-products Duopoly PDF Download
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Author: Joseph Emmett Harrington
Publisher:
ISBN:
Category :
Languages : en
Pages : 36
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Book Description
Author: Joseph Emmett Harrington
Publisher:
ISBN:
Category :
Languages : en
Pages : 36
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Book Description
Author: Godfrey Keller
Publisher:
ISBN:
Category :
Languages : en
Pages : 40
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Book Description
We study the evolution of prices in a symmetric duopoly where firms are uncertain about the degree of product differentiation. Customers sometimes perceive the products as close substitutes, sometimes as highly differentiated. Firms learn about their competitive environment from the quantities sold and a background signal. As the information of the market outcomes increases with the price differential, there is scope for active learning. In a setting with linear demand curves, we derive firms' pricing strategies as payoff-symmetric mixed or correlated Markov perfect equilibria of a stochastic differential game where the common posterior belief is the natural state variable. When information has low value, firms charge the same price as would be set by myopic players, and there is no price dispersion. When firms value information more highly, on the other hand, they actively learn by creating price dispersion. This market experimentation is transient, and most likely to be observed when the firms' environment changes sufficiently often, but not too frequently.
Author: Luis C. Corchón
Publisher: Edward Elgar Publishing
ISBN: 178536328X
Category : Business & Economics
Languages : en
Pages : 567
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Book Description
The first volume of this wide-ranging Handbook contains original contributions by world-class specialists. It provides up-to-date surveys of the main game-theoretic tools commonly used to model industrial organization topics. The Handbook covers numerous subjects in detail including, among others, the tools of lattice programming, supermodular and aggregative games, monopolistic competition, horizontal and vertically differentiated good models, dynamic and Stackelberg games, entry games, evolutionary games with adaptive players, asymmetric information, moral hazard, learning and information sharing models.
Author: Pennsylvania
Publisher:
ISBN:
Category : Economics
Languages : en
Pages : 668
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Book Description
Author: Godfrey Keller
Publisher:
ISBN:
Category : Duopolies
Languages : en
Pages : 50
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Book Description
Author: Roberto Cellini
Publisher: Emerald Group Publishing
ISBN: 0444532552
Category : Business & Economics
Languages : en
Pages : 231
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Book Description
A collection of original research papers by a number of industrial organization economists active in the field of Research and Development theory and policy. It covers patent policy, the effects of market structure and the internal organization of the firm on R&D incentives and technical progress, and R&D cooperation and technological spillovers.
Author: Francisco Ruiz-Aliseda
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
Using a two-period model, I show that competition between two symmetric duopolists trying to learn about unknown features of demand results in an informationally suboptimal process. Because a firm's marginal return to price experimentation equals zero if the rival's price is matched in the first period, myopic symmetric pricing arises in equilibrium even though a firm's expected second-period profit attains a local minimum. Furthermore, forward-looking consumers suffer from ratcheting because their first-period purchase decisions partly reveal their preferences, which exacerbates the informational suboptimality of the firms' experimentation process without affecting their pricing. The role of firm asymmetries is also analyzed.
Author: Karl Shell
Publisher:
ISBN:
Category :
Languages : en
Pages : 680
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Book Description
Author: Yale University. Cowles Foundation for Research in Economics
Publisher:
ISBN:
Category : Economics
Languages : en
Pages : 606
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Book Description
Author: Claudia Keser
Publisher: Springer
ISBN: 9783540560906
Category : Business & Economics
Languages : en
Pages : 150
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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.
