Persuasive Advertising in a Vertically Differentiated Competitive Marketplace

2020 ◽  
Vol 18 (1) ◽  
pp. 145-177
Author(s):  
Yuanfang Lin ◽  
Chakravarthi Narasimhan
Keyword(s):  
Willingness To Pay ◽  
Price Competition ◽  
Consumer Preferences ◽  
Product Category ◽  
General Assumption ◽  
Reservation Price ◽  
Theoretic Approach ◽  
Persuasive Advertising ◽  
Game Theoretic ◽  
The Cost

AbstractDespite the widely acknowledged existence in practice, the theoretical literature on persuasive advertising is generally vague about exactly how such advertising could affect consumer preferences, except for the general assumption that persuasive advertising affects consumer willingness to pay or simply “shifts demand.” This paper proposes a theoretical framework for characterizing different ways that persuasive advertising may affect consumer utility in a vertically differentiated marketplace. Firstly, persuasive advertising could simply raise consumers’ reservation price for the product category. Secondly, persuasive advertising could enhance consumers’ perception about the product quality offered by the advertising firm. Thirdly, persuasive advertising could increase consumers’ willingness to pay for quality increment. Preliminary evidences from lab studies are presented to support the existences of the proposed effects. Using a game-theoretic approach, we study two firms’ decision in the adoption of persuasive advertising of a particular effect and the associated price competition. Findings from the theoretical model analyses indicate that factors influencing a firm’s decision in persuasive advertising include consumer heterogeneity, degree of product differentiation, the effectiveness and the cost of such advertising. In a vertically differentiated competitive marketplace, persuasive adverting is a more desirable strategic tool for firms of higher-quality products to further establish a competitive advantage.

scholarly journals Quantitative Analysis of Consumer Preferences of Windows Set in South Korea: The Role of Energy Efficiency Levels

Energies ◽  
2019 ◽  
Vol 12 (9) ◽  
pp. 1816 ◽  
Author(s):  
Kwan Byum Maeng ◽  
Jiyeon Jung ◽  
Yoonmo Koo
Keyword(s):  
Energy Efficiency ◽  
Energy Consumption ◽  
South Korea ◽  
Willingness To Pay ◽  
Energy Savings ◽  
Consumer Preferences ◽  
Mixed Logit ◽  
The Government ◽  
The Cost

The building sector is considered to be important for Korean energy issues as it accounts for approximately 20% of Korea’s final energy consumption. As one of Korea’s passive strategies in its emission reduction plan is reducing energy consumption through improvements in energy efficiency because the energy loss mostly occurs from window sets, this study aims to examine the preferences and role of the energy efficiency level of window sets in South Korea. Given that the lifespan of a building exceeds 20 years, a building’s energy efficiency significantly impacts accumulated energy savings. However, window sets affect not only energy efficiency, but also the interior appearance of the building; therefore, it is important to understand consumer preferences and to examine their effect on building energy reduction accordingly. Using a mixed logit model, this study analyzes window set preferences and energy savings. As a result, this study determines that consumers consider the energy efficiency level to be the second most important factor in determining window preference, following the cost of the window. In addition, this study found that the marginal willingness to pay for efficiency level 2 window sets compared to level 3 window sets is USD 1256. For level 1 window sets, this figure increases to USD 3140. Further, a scenario analysis is conducted to analyze the government incentive program’s effectiveness in encouraging consumers to purchasing higher energy efficiency more efficient products, and thus in promoting the eco-friendly consumption of in households. Taking into consideration of households’ willingness to pay and cost saving amount for using energy efficient window sets, the optimal value of government incentives of is found to be approximately USD 700 is found to be optimal.

Numerically Stable Design Optimization With Price Competition

2014 ◽  
Vol 136 (8) ◽  
Author(s):  
W. Ross Morrow ◽  
Joshua Mineroff ◽  
Kate S. Whitefoot
Keyword(s):  
Price Competition ◽  
Performance Metrics ◽  
Consumer Preferences ◽  
Market Model ◽  
Optimal Designs ◽  
Future Price ◽  
Design Decisions ◽  
Computational Optimization ◽  
Game Theoretic ◽  
The Impact

Researchers in decision-based design (DBD) have suggested that business objectives, e.g., profits, should replace engineering requirements or performance metrics as the objective for engineering design. This requires modeling market performance, including consumer preferences and competition between firms. Game-theoretic “design-then-pricing” models—i.e., product design anticipating future price competition–provide an important framework for integrating consumer preferences and competition when design decisions must be made before prices are decided by a firm or by its competitors. This article concerns computational optimization in a design-then-pricing model. We argue that some approaches may be fundamentally difficult for existing solvers and propose a method that exhibits both improved efficiency and reliability relative to existing methods. Numerical results for a vehicle design example validate our theoretical arguments and examine the impact of anticipating pricing competition on design decisions. We find that anticipating pricing competition, while potentially important for accurately forecasting profits, does not necessarily have a significant effect on optimal design decisions. Most existing examples suggest otherwise, anticipating competition in prices is important to choosing optimal designs. Our example differs in the importance of design constraints, that reduce the influence the market model has on optimal designs.

scholarly journals Cross-Sale In Integrated Supply Chain System

2012 ◽  
Vol 10 (5) ◽  
pp. 277
Author(s):  
Bin Shao ◽  
Kunpeng Li
Keyword(s):  
Supply Chain ◽  
Price Competition ◽  
Distribution Channel ◽  
Distribution Channels ◽  
Theoretic Approach ◽  
Supply Chain System ◽  
Game Theoretic ◽  
Integrated Supply Chain ◽  
Game Theoretic Approach ◽  
First Mover

In this article, we study two manufacturers, each producing a single substituting product, selling the products through their own centralized distribution channels, and also using each others distribution channel at their choice. Distribution channels are also substitutable. Using price competition and a game theoretic approach, we find that the same products can be sold at a higher price in the cross-sale channel than in its own centralized distribution channel. The first mover in doing a cross-sale doesnt necessarily enjoy the advantage in terms of higher profit. Not only manufacturers can charge higher prices for their own and cross-sold product from their competitor, but also cross-sale increases the profits of both manufacturers; and most importantly, cross-sale improves the systems profit dramatically.

scholarly journals A game theoretic power control and spectrum sharing approach using cost dominance in cognitive radio networks

2021 ◽  
Vol 7 ◽  
pp. e617
Author(s):  
Sundus Naseer ◽  
Qurratul-Ain Minhas ◽  
Khalid Saleem ◽  
Ghazanfar Farooq Siddiqui ◽  
Naeem Bhatti ◽  
...  
Keyword(s):  
Cognitive Radio ◽  
Spectrum Sharing ◽  
Theoretic Approach ◽  
Global Function ◽  
Available Bandwidth ◽  
Game Theoretic ◽  
The Cost ◽  
Efficient Power ◽  
Game Theoretic Approach

The wireless networks face challenges in efficient utilization of bandwidth due to paucity of resources and lack of central management, which may result in undesired congestion. The cognitive radio (CR) paradigm can bring efficiency, better utilization of bandwidth, and appropriate management of limited resources. While the CR paradigm is an attractive choice, the CRs selfishly compete to acquire and utilize available bandwidth that may ultimately result in inappropriate power levels, causing degradation in network’s Quality of Service (QoS). A cooperative game theoretic approach can ease the problem of spectrum sharing and power utilization in a hostile and selfish environment. We focus on the challenge of congestion control that results in inadequate and uncontrolled access of channels and utilization of resources. The Nash equilibrium (NE) of a cooperative congestion game is examined by considering the cost basis, which is embedded in the utility function. The proposed algorithm inhibits the utility, which leads to the decrease in aggregate cost and global function maximization. The cost dominance is a pivotal agent for cooperation in CRs that results in efficient power allocation. Simulation results show reduction in power utilization due to improved management in cognitive radio resource allocation.

Numerically Stable Design Optimization With Price Competition

2012 ◽  
Author(s):  
W. Ross Morrow ◽  
Joshua Mineroff ◽  
Kate S. Whitefoot
Keyword(s):  
Engineering Design ◽  
Price Competition ◽  
Performance Metrics ◽  
Consumer Preferences ◽  
Mixed Logit ◽  
Sufficient Conditions ◽  
Mixed Logit Models ◽  
Game Theoretic ◽  
Pricing Problems ◽  
Decision Based Design

Researchers in Decision-Based Design have asserted that business objectives, e.g. profits, should replace engineering requirements or performance metrics as the objective for engineering design. Using profits as the objective for engineering design, however, requires modeling consumer preferences and competition between firms. Game theoretic “design-then-pricing” models—i.e. product design with price competition—provide an important framework for integrating consumer preferences and competition when design decisions must be made before prices are decided by a firm or by its competitors. This article proposes a method for solving design-then-pricing problems that exhibits improved efficiency and reliability, relative to existing methods. Numerical results for a vehicle design example using three solvers—matlab, KNITRO, and SNOPT—to validate this claim. We also highlight the importance of checking the Second-Order Sufficient Conditions in design-then-pricing problems that use Mixed Logit models of demand.

scholarly journals A voluntary use of insecticide treated nets can stop the vector transmission of Chagas disease

2020 ◽  
Vol 14 (11) ◽  
pp. e0008833
Author(s):  
Cheol Yong Han ◽  
Habeeb Issa ◽  
Jan Rychtář ◽  
Dewey Taylor ◽  
Nancy Umana
Keyword(s):  
Chagas Disease ◽  
Neglected Tropical Diseases ◽  
Incidence Rates ◽  
Theoretic Approach ◽  
Insecticide Treated Nets ◽  
Vector Transmission ◽  
Game Theoretic ◽  
Individual Decisions ◽  
Individual Use ◽  
The Cost

One of the stated goals of the London Declaration on Neglected Tropical Diseases is the interruption of domiciliary transmissions of Chagas disease in the region of the Americas. We used a game-theoretic approach to assess the voluntary use of insecticide treated nets (ITNs) in the prevention of the spread of infection through vector bites. Our results show that individuals behave rationally and weigh the risks of insect bites against the cost of the ITNs. The optimal voluntary use of ITNs results in predicted incidence rates that closely track the real incidence rates in Latin America. This means that ITNs are effective and could be used to control the spread of the disease by relying on individual decisions rather than centralized policies. Our model shows that to completely eradicate the vector transmission through the voluntary individual use of ITNs, the cost of ITNs should be as low as possible.

scholarly journals Hegemons, Leaders and Followers: A Game-Theoretic Approach to the Postwar Dynamics of International Political Economy

1997 ◽  
pp. 35-93 ◽  
Author(s):  
Kjell Hausken ◽  
Thomas Plumper
Keyword(s):  
Political Economy ◽  
Public Goods ◽  
Multiple Equilibria ◽  
International Political Economy ◽  
Theoretic Model ◽  
Theoretic Approach ◽  
The Public ◽  
Benevolent Leadership ◽  
Game Theoretic ◽  
The Cost

The article introduces the concept of hegemony to leadership theory, which has developed mainly as a critique of hegemonic stability theory. We argue that it makes sense to combine the two theories by introducing the concept of 'size' into neoliberal thinking about International Political Economy. We accept the neo-institutional hypothesis that a hegemon is not needed to provide public goods, and demonstrate with non-cooperative games how multiple leaders may jointly provide public goods. A game-theoretic model is developed illustrating with Nash equilibria the conditions under which a hegemon rationally switches from hegemony to leadership. It also shows why followers rationally switch from free-riding in their consumption of the public goods to taking part in leading, in the sense of contributing to covering the cost of the production of the public goods. The emergence of joint leadership leads to multiple equilibria in the sense of allowing for multiple stable leadership constellations. The actors are in a mixed-motive or coordination game where they have different preferences for the equilibria, and thus different preferences for which strategies to choose, and for who is to take part in covering the cost of the production of the public goods. Two aspects of joint leadership 'after hegemony' are treated, namely coercive and benevolent leadership on the one hand, and collective action in the sense of joint leadership on the other hand. Finally, future leadership constellations and the quest for international order are discussed.

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