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Pricing Product Diversity And Search Costs
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Book Synopsis Pricing, Product Diversity, and Search Costs by : Simon P. Anderson
Download or read book Pricing, Product Diversity, and Search Costs written by Simon P. Anderson and published by . This book was released on 2000 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study price competition in the presence of search costs and product differentiation. The limit cases of the model are the "Bertrand Paradox," the "Diamond Paradox," and Chamberlinian monopolistic competition. Market prices rise with search costs and decrease with the number of firms. Prices may initially fall with the degree of product differentiation because more diversity leads to more search and more competition. Equilibrium diversity rises with search costs, while the optimum level falls, so entry is excessive. The market failure is most pronounced for low preference for variety and high search costs.
Book Synopsis Prices, Product Differentiation, and Heterogeneous Search Costs by : José Luis Moraga-González
Download or read book Prices, Product Differentiation, and Heterogeneous Search Costs written by José Luis Moraga-González and published by . This book was released on 2014 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Product Choice and Price Discrimination in Markets with Search Costs by : Natalia Fabra
Download or read book Product Choice and Price Discrimination in Markets with Search Costs written by Natalia Fabra and published by . This book was released on 2017 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: In a seminal paper, Champsaur and Rochet (1989) showed that competing firms choose non-overlapping qualities so as to soften price competition at the cost of giving up profitable opportunities to price discriminate. In this paper we show that an arbitrarily small amount of search costs is enough to give rise to an equilibrium with overlapping qualities. In markets with search costs, competing firms face the monopolist's incentive to price discriminate, which induces them to offer the full quality range even if this forces them to compete head-to-head. Hence, even though search costs increase prices and reduce consumers surplus for given quality choices, search costs can also lead to lower prices and higher consumer surplus whenever they induce firms to offer broader and overlapping product lines. Our analysis also provides predictions regarding pricing by multi-product firms in markets with search costs under various retail market structures. Product choices and pricing by online bookstores motivate our findings.
Book Synopsis Price-directed Search, Product Differentiation and Competition by : Martin Obradovits
Download or read book Price-directed Search, Product Differentiation and Competition written by Martin Obradovits and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Especially in many online markets, consumers can readily observe prices, but may need to further inspect products to assess their suitability. We study the effects of product differentiation and search costs on competition and market outcomes in a tractable model of price-directed consumer search. We find that (i) firms' equilibrium pricing always induces efficient search behavior, (ii) for relatively large product differentiation, welfare distortions still occur because some consumers (may) forgo consumption, and (iii) lower search costs lead to stochastically higher prices, increasing firms' expected profits and decreasing their frequency of sales. Consumer surplus often falls when search costs decrease.
Book Synopsis Handbook of Game Theory and Industrial Organization, Volume II by : Luis C. Corchón
Download or read book Handbook of Game Theory and Industrial Organization, Volume II written by Luis C. Corchón and published by Edward Elgar Publishing. This book was released on 2018-02-23 with total page 547 pages. Available in PDF, EPUB and Kindle. Book excerpt: This second volume of the Handbook includes original contribution by experts in the field. It provides up-to-date surveys of the most relevant applications of game theory to industrial organization. The book covers both classical as well as new IO topics such as mergers in markets with homogeneous and differentiated goods, leniency and coordinated effects in cartels and mergers, static and dynamic contests, consumer search and product safety, strategic delegation, platforms and network effects, auctions, environmental and resource economics, intellectual property, healthcare, corruption, experimental industrial organization and empirical models of R&D.
Book Synopsis Simultaneous Search for Differentiated Products by : José L. Moraga González
Download or read book Simultaneous Search for Differentiated Products written by José L. Moraga González and published by . This book was released on 2020 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper extends the literature on simultaneous search by allowing for differentiated products and consumer search cost heterogeneity. In a duopolistic market, consumers with sufficiently low search costs choose to inspect the products of the two firms and purchase, if any, the most suitable; consumers with higher search costs choose to examine just one of the products; consumers with prohibitively high search costs do not check any of the products and drop out of the market altogether. For arbitrary search cost distributions, when match values are assumed to be uniformly distributed, a symmetric price equilibrium always exists. We provide a necessary and sufficient condition on the search cost distribution under which an increase in the costs of search of all consumers may result in a lower, equal or higher equilibrium price. The effects of prominence on equilibrium prices are also studied. The prominent firm charges a higher price than the non-prominent firm and both their prices are below the symmetric equilibrium price. Consequently, with simultaneous search, market prominence increases the surplus of consumers. In an extension, we provide conditions under which the equilibrium of the N-firm model exists.
Book Synopsis Firm Pricing with Consumer Search by : Simon P. Anderson
Download or read book Firm Pricing with Consumer Search written by Simon P. Anderson and published by . This book was released on 2016 with total page 55 pages. Available in PDF, EPUB and Kindle. Book excerpt: Economists could not properly capture the impact of internet on markets without a proper theory of consumer search. As a result, this theory has been rediscovered and developed further since the early 2000s. It can address such critical questions as the impact of reduced search cost on prices, variety, and product choice as well as advertising practices (such as search advertising). This theoretical development has also fed into a rich empirical literature exploiting the wealth of data that is now available regarding both consumers' and firms' online activity. The goal of this chapter is to present the basic concepts underpinning the theory of imperfectly competitive markets with consumer search. We stress that appropriate theoretical frameworks should involve sufficient heterogeneity among agents on both sides of the market. We also explain why the analysis of ordered search constitutes an essential ingredient for modeling recent search environments.
Book Synopsis Pricing of Products & Services by : Tridib Mazumbar
Download or read book Pricing of Products & Services written by Tridib Mazumbar and published by World Scientific Publishing Company. This book was released on 2020 with total page 250 pages. Available in PDF, EPUB and Kindle. Book excerpt: The price of a product or a service is a critical element of the marketing mix. If priced too low, product sales may go up, but the product margin suffers; priced too high, customers look for other alternatives and sales may decline. Despite the critical role price plays in influencing corporate revenue and profit growths, formal training of the pricing function is often missing from business school curriculum. This book provides business students as well as managers necessary tools to make profitable pricing decisions under a variety of real-life contexts current and emerging. It offers a balance of theory, applications, and analytics to achieve the goal of arriving at appropriate pricing decisions in a competitive and changing business environment. The book begins with a framework for pricing decision and utilizes short cases and numerical illustrations to demonstrate how customer valuation, cost, and competition are triangulated to arrive at a feasible price range for a new or an existing product. Theories from economics and psychology provide conceptual foundations for price customization and segmentation, framing price offers to customers, price bundling, and other prevalent pricing practices.
Book Synopsis Innovation in Pricing by : Andreas Hinterhuber
Download or read book Innovation in Pricing written by Andreas Hinterhuber and published by Routledge. This book was released on 2017-08-08 with total page 407 pages. Available in PDF, EPUB and Kindle. Book excerpt: Pricing has a substantial and immediate impact on profitability. Most companies, however, still use costs or competition as their main basis for setting prices. Product or business model innovation has a high priority for many companies, yet innovation in pricing received scant attention until the first edition of this groundbreaking book. This new edition of Innovation in Pricing builds on the success of the first, examining the ways in which pricing innovation can drive profits through cutting-edge academic research and best practice case studies from leading academics, business practitioners and consultants in pricing. The second edition has been fully revised and updated according to the latest developments in pricing, with: revisions to all chapters new chapters, including a chapter on business model and pricing model innovation a new introduction that makes explicit just what strategic pricing can do for your organization. This book is the only book dedicated to innovation in pricing and is an essential read for business executives, innovation managers and pricing managers wishing to treat innovation in pricing as seriously as they treat product, service or business model innovation. It is also valuable supplementary reading for advanced students of marketing and sales.
Book Synopsis Industrial Organization by : Paul Belleflamme
Download or read book Industrial Organization written by Paul Belleflamme and published by Cambridge University Press. This book was released on 2015-07-30 with total page 827 pages. Available in PDF, EPUB and Kindle. Book excerpt: Thoroughly revised according to classroom feedback, Industrial Organization: Markets and Strategies offers an up-to-date and rigorous presentation of modern industrial organization that blends theory with real-world applications and derives implications for firm strategy and competition policy. This comprehensive textbook acquaints readers with the most important models for understanding strategies chosen by firms with market power and shows how such firms adapt to different market environments. The second edition includes new and revised formal models and case studies. Formal models are presented in detail, and analyses are summarized in 'lessons' which highlight the main insights. Theories are complemented by numerous real-world cases that engage students and lead them to connect theories to real situations. Chapters include review questions, exercises, and suggestions for further reading to enhance the learning experience, and an accompanying website offers additional student exercises, as well as teaching slides.
Book Synopsis Competition, Pricing, and Product Entry in Markets with Costly Search by : Ilya Morozov
Download or read book Competition, Pricing, and Product Entry in Markets with Costly Search written by Ilya Morozov and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In the first chapter of this paper, I study how much consumers benefit from new products in markets with information frictions. I analyze new products in the U.S. hard drive market, a market with ample product innovation. Using unique browsing data, I measure the magnitude of two frictions, limited consideration and costly search, and show that both play a crucial role in shaping consumer demand. Omitting these frictions from analysis makes the researcher underestimate consumer surplus from new hard drives, as it appears that consumers do not like the attributes these hard drives offer. Partly eliminating frictions substantially increases consumers' ability to benefit from new hard drives. In the second chapter, I study the estimation of preference heterogeneity in markets where consumers engage in costly search to learn product characteristics. Costly search amplifies the way consumer preferences translate into purchase probabilities, generating a seemingly large degree of preference heterogeneity. We develop a search model that allows for flexible heterogeneity in preferences and estimate its parameters using a unique panel dataset on the search and purchase behavior of consumers. The estimation results reveal that when search costs are ignored, the model overestimates standard deviations of product intercepts by 68%. We show that the bias in heterogeneity estimates leads to incorrect inference about price elasticities and seller markups and has important consequences for targeted marketing.
Book Synopsis Essays on Consumer Search Cost and Firms' Mixed Pricing Strategy by : Xing Zhang
Download or read book Essays on Consumer Search Cost and Firms' Mixed Pricing Strategy written by Xing Zhang and published by . This book was released on 2013 with total page 80 pages. Available in PDF, EPUB and Kindle. Book excerpt: Essay I: A full equilibrium approach is proposed in this paper to estimate the distribution of consumer price search costs when (i) consumers adopt sequential or non-sequential search strategy and, (ii) consequently firms adopt a mixed pricing strategy. We model jointly the distributions of prices and sales when the market is at equilibrium. The major methodological challenge is that we have to model the distribution of prices instead of a single optimal price. To solve this problem, we use the non-parametric Maximum Empirical Likelihood estimator (Owen 1988) in model estimation. Through a series of simulation studies, we show that modeling the interplay between firms' pricing strategy and consumers' price search strategy is critical in order to correctly infer the search cost distribution. Finally, we apply the method to a dataset provided by a firm in a B-to-B market, and find that our model can explain the observed variation in prices and transactions, and recover reasonably well the supply cost of the firm. Essay II: In this paper we empirically examine the effect of buyers' cost of price search on firms' pricing strategy in a B-to-B market. We propose a full equilibrium approach to simultaneously model the observed price variation and transactions in the market, where buyers engage in costly price search and as a result firms adopt a mixed pricing strategy. Estimation results provide evidence that buyers in our data sequentially sample prices as this model out-performs another classical non-sequential search model in terms of recovering the "kink" price distribution (probability mass being highly concentrated at some price points) and the true supply cost in our data. We then illustrate how a lower search cost distribution (lower mean) can support a mixed price equilibrium with a higher average price, suggesting that the common belief of lower search costs leading to lower prices can be misleading. Finally, we extend our model framework to study how keyword search advertising may influence firms' prices and profits. By placing advertisement at the top of a search page, we assume an advertiser differentiates from other firms as the first place to start searching for some buyers. We find that the advertiser will charge the lowest price when the proportion of buyers using keyword search is from small to medium but, as the proportion further increases it will eventually charge at the highest price. Measuring the profit difference between the advertiser and non-advertising firms will help infer the willingness-to-pay for search advertising.
Book Synopsis Structural Econometric Modeling in Industrial Organization and Quantitative Marketing by : Ali Hortaçsu
Download or read book Structural Econometric Modeling in Industrial Organization and Quantitative Marketing written by Ali Hortaçsu and published by Princeton University Press. This book was released on 2023-10-24 with total page 281 pages. Available in PDF, EPUB and Kindle. Book excerpt: A concise and rigorous introduction to widely used approaches in structural econometric modeling Structural econometric modeling specifies the structure of an economic model and estimates the model’s parameters from real-world data. Structural econometric modeling enables better economic theory–based predictions and policy counterfactuals. This book offers a primer on recent developments in these modeling techniques, which are used widely in empirical industrial organization, quantitative marketing, and related fields. It covers such topics as discrete choice modeling, demand modes, estimation of the firm entry models with strategic interactions, consumer search, and theory/empirics of auctions. The book makes highly technical material accessible to graduate students, describing key insights succinctly but without sacrificing rigor. • Concise overview of the most widely used structural econometric models • Rigorous and systematic treatment of the topics, emphasizing key insights • Coverage of demand estimation, estimation of static and dynamic game theoretic models, consumer search, and auctions • Focus on econometric models while providing concise reviews of relevant theoretical models
Book Synopsis Game Theory and Business Applications by : Kalyan Chatterjee
Download or read book Game Theory and Business Applications written by Kalyan Chatterjee and published by Springer Science & Business Media. This book was released on 2013-06-26 with total page 407 pages. Available in PDF, EPUB and Kindle. Book excerpt: Game theory has been applied to a growing list of practical problems, from antitrust analysis to monetary policy; from the design of auction institutions to the structuring of incentives within firms; from patent races to dispute resolution. The purpose of Game Theory and Business Applications is to show how game theory can be used to model and analyze business decisions. The contents of this revised edition contain a wide variety of business functions – from accounting to operations, from marketing to strategy to organizational design. In addition, specific application areas include market competition, law and economics, bargaining and dispute resolution, and competitive bidding. All of these applications involve competitive decision settings, specifically situations where a number of economic agents in pursuit of their own self-interests and in accordance with the institutional “rules of the game” take actions that together affect all of their fortunes. As this volume demonstrates, game theory provides a compelling guide for analyzing business decisions and strategies.
Author :Compiled by the British Library of Political and Economic Science Publisher :Psychology Press ISBN 13 :9780415240093 Total Pages :660 pages Book Rating :4.2/5 (4 download)
Book Synopsis Ibss: Economics: 1999 by : Compiled by the British Library of Political and Economic Science
Download or read book Ibss: Economics: 1999 written by Compiled by the British Library of Political and Economic Science and published by Psychology Press. This book was released on 2000-12-07 with total page 660 pages. Available in PDF, EPUB and Kindle. Book excerpt: IBSS is the essential tool for librarians, university departments, research institutions and any public or private institution whose work requires access to up-to-date and comprehensive knowledge of the social sciences
Book Synopsis Industrial Organization in Context by : Stephen Martin
Download or read book Industrial Organization in Context written by Stephen Martin and published by Oxford University Press, USA. This book was released on 2010-04-22 with total page 1021 pages. Available in PDF, EPUB and Kindle. Book excerpt: Industrial Organization in Context examines the economics of markets, industries and their participants and public policy towards these entities. It takes an international approach and incorporates discussion of experimental tests of economic models.
Book Synopsis The Strategy and Tactics of Pricing by : Thomas T. Nagle
Download or read book The Strategy and Tactics of Pricing written by Thomas T. Nagle and published by Taylor & Francis. This book was released on 2023-07-31 with total page 361 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Strategy and Tactics of Pricing is the most well-established and influential strategic pricing text available, relied on by practitioners and students globally as a core guide for value-based pricing. The book explains how to balance the ability to create and extract value through from markets by managing pricing decisions in a more strategic and profitable manner. Rather than calculating prices to cover costs or to achieve sales goals, readers will learn to frame more strategic choices that proactively influence customer perceptions of value, manage internal costs, and profitably shift demand curves. This edition features new discussions on harnessing concepts from behavioral economics as well as a refined "value cascade" to help organize the topics covered in this book. Readers will also benefit from: Major revisions to more than a third of the chapters, including an expanded discussion of the role of artificial intelligence and machine learning analytics tools to assist in the evaluation of new pricing opportunities Discussion of many of the new pricing and revenue-recognition models such as consumption-based pricing, outcomes-based pricing, and others An expanded discussion on "Special Topics in Pricing" that cover many of the transformative pricing moves successful companies have made in the past few years in response to major disruptive forces such as the pandemic as well as re-emergent inflation In-chapter textboxes and call-out to highlight different "pricing concepts in action" using actual examples of companies addressing market challenges Chapter summaries and visual aids to help the reader better understand the ideas and concepts presented throughout this book This comprehensive, managerially-focused text is a must-read for students and professionals with an interest in strategic price management and achieving commercial excellence for their organizations. Additional online resources include PowerPoint slides and an instructor’s manual, including exercises, mini-cases, and examination questions.
