scholarly journals Experiments In Bertrand Competition With Factor Markets

2010 ◽  
Vol 8 (3) ◽  
Author(s):  
Randall E. Waldron ◽  
Michael A. Allgrunn ◽  
Guoqiang Pei
Keyword(s):  
Student Satisfaction ◽  
Product Differentiation ◽  
Price Competition ◽  
Student Behavior ◽  
Student Understanding ◽  
Font Size ◽  
Market Outcomes ◽  
Classroom Experiment ◽  
Factor Markets ◽  
Bertrand Price Competition

<p class="MsoNormal" style="text-justify: inter-ideograph; text-align: justify; margin: 0in 0.5in 0pt; mso-pagination: none;"><span style="font-size: 10pt;"><span style="font-family: Times New Roman;">We present a classroom experiment which introduces product differentiation and factor markets into the traditional Bertrand framework.<span style="mso-spacerun: yes;">&nbsp; </span>We find that student behavior converges toward the market outcomes predicted by theory.<span style="mso-spacerun: yes;">&nbsp; </span>We also find that the experiment enhances student understanding of Bertrand price competition in a market with product differentiation and factor markets, and also appears to increase student satisfaction.</span></span></p>

scholarly journals Scanner Data: New Opportunities for Demand and Competitive Strategy Analysis

1994 ◽  
Vol 23 (2) ◽  
pp. 125-139 ◽  
Author(s):  
Ronald W. Cotterill
Keyword(s):  
Market Power ◽  
Price Competition ◽  
Tacit Collusion ◽  
Scanner Data ◽  
Strategy Analysis ◽  
Price Response ◽  
Oligopoly Model ◽  
Sufficient Detail ◽  
Bertrand Price Competition ◽  
Reaction Equations

This paper reviews prior research by agricultural economists on the demand for food products using scanner data. Thereafter, a differentiated product's oligopoly model with Bertrand price competition is developed and used to specify brand level demand and oligopoly price reaction equations. The model has sufficient detail to estimate brand level price elasticities and price response elasticities which in turn can be used to estimate three indices of market power. The first index estimated is the familiar Rothschild Index. The paper develops estimates two new indexes, the observed index and the Chamberlin quotient for tacit collusion. It concludes with comments on how the proposed method for the measurement of market power in a differentiated oligopoly can be improved.

PRODUCT DIFFERENTIATION IN SPA TOURISM AS A MAIN COMPETITIVE ADVANTAGE

2020 ◽  
Author(s):  
Violeta Bashova ◽  
Keyword(s):  
Competitive Advantage ◽  
Product Design ◽  
Product Differentiation ◽  
Market Segmentation ◽  
Social Distance ◽  
Price Competition ◽  
Innovative Product ◽  
Distinctive Features ◽  
Innovative Solutions ◽  
The World

Development in the spa industry is going through difficulties caused by the world situation of tourism recovery. In days of compliance with anti-epidemic measures and social distance, the restoration of the spa offer will be based on innovative solutions for diversity in the spa services and products. This is the challenge of more enterprising and resourceful professionals in business to avoid the struggle for survival. One of their main fulcrums is reorientation towards non-price competition, which is based on the distinctive features of the product. Either it consists of innovative product design or mere market segmentation, product differentiation typically involves externalities across competitors, which clearly play an important role in firm's competitive incentives to invest in differentiation. The purpose of this report is through research and analysis of supply and development in spas, to prove the hypothesis that the diversity of spa products and services is fundamental to recovering in a highly competitive and further financially aggravated, current environment in tourism.

scholarly journals THE DYNAMICS OF BERTRAND PRICE COMPETITION WITH COST-REDUCING INVESTMENTS

2018 ◽  
Vol 59 (4) ◽  
pp. 1681-1731 ◽  
Author(s):  
Fedor Iskhakov ◽  
John Rust ◽  
Bertel Schjerning
Keyword(s):  
Price Competition ◽  
Bertrand Price Competition

scholarly journals Competitive Effects of Mass Customization

2012 ◽  
Vol 10 (1) ◽  
Author(s):  
Oksana Loginova
Keyword(s):  
Product Differentiation ◽  
Mass Customization ◽  
Operations Management ◽  
Price Competition ◽  
Comparative Statics ◽  
Consumer Involvement ◽  
The Other ◽  
Fixed Cost ◽  
Competitive Effects ◽  
Customized Products

Abstract The existing theoretical literature on mass customization maintains that customization reduces product differentiation and intensifies price competition. In contrast, operations management studies argue that customization serves primarily to differentiate a company from its competitors. Interactive involvement of the customer in product design creates an affective relationship with the firm, relaxing price competition. This paper provides a model that incorporates consumer involvement to explain the phenomena described in the operations management literature.Two firms on the Hotelling line compete for a continuum of consumers with heterogeneous brand preferences. An exogenously given fraction of consumers is potentially interested in customization. Consumer benefits from customization are the rewards from a special shopping experience and the value of product customization (a better fitting product); these benefits are higher for consumers located closer to the customizing brand. When a consumer purchases a customized product, he/she incurs waiting costs. Each firm simultaneously decides whether to offer standard products, customized products, or both, and then engage in price competition. I show that customization increases product differentiation, leading to less intense price competition. Depending on the parameter values, in equilibrium either both firms offer customized products, one firm offers customized products and the other standard and customized products, or one firm offers customized products and the other standard products. I perform comparative statics analysis with respect to the fraction of consumers interested in customization, the waiting costs, and the fixed cost of customization.

scholarly journals Bertrand Oligopoly And Factors Markets With Scarcity And Price Controls

2012 ◽  
Vol 10 (6) ◽  
pp. 355
Author(s):  
Randall E. Waldron ◽  
Michael A. Allgrunn
Keyword(s):  
Minimum Wage ◽  
Price Competition ◽  
Price Controls ◽  
Classroom Experiment ◽  
Differentiated Goods ◽  
Rental Rate ◽  
The One ◽  
Input Markets ◽  
Bertrand Oligopoly ◽  
Stable Outcome

In an earlier article, we reported the results of a classroom experiment simulating price competition in an oligopoly with differentiated goods. That study raised some questions that we were unable to address at that time. For this current study, we have adapted the experiment to further explore the effects of scarcity in the input markets, and to study the effects of price controls in these markets. We find that scarcity in an input market has the expected directional effect on prices in both input and output markets, but not necessarily the magnitude expected; we further find that price controls have only some of the effects expected. In the current experiment, we increased the number of rounds of the game to allow more opportunity for convergence to a stable outcome, and to allow for three distinct phases of the game: initial rounds in which inputs were abundantly available, subsequent rounds in which one inputs supply was dramatically reduced, and final rounds in which a price floor was established on the one input which remained abundant. As expected, firms played Nash/Bertrand strategies in the early rounds. However, the shock caused by reducing the availability of capital took many rounds for full adjustment, with both output prices and the equilibrium rental rate of capital rising consistently and gradually toward their projected equilibria over ten rounds, although even then capital prices did not rise enough to absorb all firm profits. Surprisingly, establishing a minimum wage did not have the anticipated effect of balancing payments between labor and capital; instead, the minimum wage completely disrupted the trend of an increasing rental price of capital and reduced it to zero, while creating volatility in profits without consistently eliminating them. Overall, we find that most of our anticipated results ultimately obtain, but adjustments to variations in market conditions are neither immediate nor perfectly consistent with the predictions of theory.

Competitive Effects of Purchase-Based Targeted Advertising

2012 ◽  
Vol 10 (4) ◽  
pp. 71-84
Author(s):  
Jianqiang Zhang ◽  
Weijun Zhong ◽  
Shue Mei
Keyword(s):  
Social Welfare ◽  
Product Differentiation ◽  
Price Competition ◽  
Consumer Surplus ◽  
Consumer Information ◽  
Competitive Effects ◽  
Targeted Advertising ◽  
Consumer Valuation ◽  
Competitive Environments ◽  
Second Period

This paper develops a two-period sales model to investigate the competitive effects of purchase-based targeted advertising. In the model, two competing firms gain consumer information during the first period sales, which allows them to target advertising based on consumer purchase history. Advertising is assumed to be persuasive in terms of consumer valuation enhancing and product differentiation increasing. The authors find that the firm’s ability to target can damage industry profits, consumer surplus, and even social welfare. The conditions under which targeted advertising is positive or negative are derived, showing that price competition is softened in the second period but intensified in the first. It is suggested that firms under competitive environments cautiously sponsor targeted advertising with appropriate contents.

Brand, Product Differentiation and Postal Market Outcomes

2018 ◽  
pp. 219-233
Author(s):  
Isabelle Carslake ◽  
George Houpis ◽  
Ellie Monaghan
Keyword(s):  
Product Differentiation ◽  
Market Outcomes ◽  
Brand Product

Price-Informative Advertising and Market Performance

1985 ◽  
Vol 37 (1) ◽  
pp. 35-40
Author(s):  
David K Round
Keyword(s):  
Economic Theory ◽  
Research And Development ◽  
Product Differentiation ◽  
Price Competition ◽  
Service Research ◽  
Informative Advertising ◽  
Modern Approach ◽  
Quality Product ◽  
Product Image ◽  
The Empirical Analysis

A long-standing proposition of economic theory is that real competition between firms is based on price competition. Economists have for years used the term ‘non-price competition’ to cover the product differentiation activities of firms, which tends to suggest that product differentiation (and its associated advertising) and price competition are mutually exclusive. Strictly speaking, in terms of economic theory, this is true. But the more modern approach to the empirical analysis of competition is to treat it as a process involving rivalry, whereby firms seek to gain an advantage over rivals as a result of strategic moves involving price, output, product quality, product image, service, research and development, and so on. Thus analysis of the price information provided by firms in their advertising messages may provide some useful insights into the ways in which these firms seek to compete with their rivals.

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