Product Quality and Market Size: Price Competition Between a Large and Small Country

2006 ◽  
Vol 6 (1) ◽  
pp. 1850080 ◽  
Author(s):  
Jannett K Highfill ◽  
Robert C Scott
Keyword(s):  
Product Quality ◽  
Free Trade ◽  
Price Competition ◽  
Market Size ◽  
Home Market ◽  
Small Country ◽  
Price Effects ◽  
Social Surplus ◽  
Sales Increase

In a two-country world for a product which in the absence of trade is provided by a monopoly in each country, opening trade effectively creates a world duopoly rather than two separate country monopolies. Suppose the goods produced in the competing countries differ in quality because the firm's home market sizes differ and quality is chosen before trade opens. Our results suggest that consumers benefit in free trade both from the choice of qualities and from the price competition. Social surplus for both countries is higher in trade than autarky—and although normally firms lose due to the increased competition, occasionally one of the firms may actually gain in trade. The competition between firms means that the trade price is less than the autarky price, but sales increase, sometimes enough to offset the price effects.

scholarly journals Beyond the Home Market Effect: Market Size and Specialization in a Multi-Country World

2010 ◽  
Author(s):  
Kristian Behrens ◽  
Andrea Roberto Lamorgese ◽  
Gianmarco I.P. Ottaviano ◽  
Takatoshi Tabuchi
Keyword(s):  
Market Size ◽  
Home Market ◽  
Home Market Effect ◽  
Market Effect

scholarly journals Product bundling and advertising strategy for a duopoly supply chain: a power-balance perspective

2020 ◽  
Author(s):  
Sarat Kumar Jena ◽  
Abhijeet Ghadge
Keyword(s):  
Supply Chain ◽  
Price Competition ◽  
Market Size ◽  
Power Balance ◽  
Supply Chain Network ◽  
Product Bundling ◽  
Advertising Strategy ◽  
Advertising Effort ◽  
Total Profit ◽  
The Impact

AbstractThe paper studies product bundling in a duopoly supply chain network under the influence of different power-balance structures, bundling decisions and advertising efforts on total supply chain profit. Mathematical models comprising two manufacturers and a single retailer are developed to capture the impact of bundling policy and advertisement strategy under three power-balance structures, namely Manufacturer Stackelberg, Retailer Stackelberg and Vertical Nash. Following game theory models and numerical examples, the study found that the total profit of the supply chain is undifferentiated under the manufacturer Stackelberg and Vertical Nash case in the manufacturer bundling and retailer bundling strategies. However, total supply chain profit under manufacturer bundling strongly dominates under retailer bundling in Retailer Stackelberg and Vertical Nash, and remains valid under multiple settings of market size, price elasticity and advertising elasticity. It is also found that manufacturer bundling is significantly affected by advertising effort compared to retailer bundling. The study contributes to the literature interfacing supply chain and marketing by studying bundling policy and advertising strategy simultaneously for homogenous products, under various power-balance structures and price competition.

scholarly journals Advertising Competition in Retail Markets

2010 ◽  
Vol 10 (1) ◽  
Author(s):  
Kyle Bagwell ◽  
Gea M Lee
Keyword(s):  
Price Competition ◽  
Consumer Welfare ◽  
Comparative Statics ◽  
Productive Efficiency ◽  
Production Costs ◽  
Retail Markets ◽  
Social Surplus ◽  
Price Advertising ◽  
Search Rule ◽  
Number Of Firms

Abstract We consider non-price advertising by retail firms that are privately informed as to their respective production costs. We construct an advertising equilibrium in which informed consumers use an advertising search rule whereby they buy from the highest-advertising firm. Consumers are rational in using the advertising search rule since the lowest-cost firm advertises the most and also selects the lowest price. Even though the advertising equilibrium facilitates productive efficiency, we establish conditions under which firms enjoy higher expected profit when advertising is banned. Consumer welfare falls in this case, however. Under free entry, social surplus is higher when advertising is allowed. In addition, we consider a benchmark model of price competition; we provide comparative-statics results with respect to the number of informed consumers, the number of firms and the distribution of costs; and we consider the possibility of sequential search.

Structural Change in the European Package Tour Industry: UK/German Comparisons

1997 ◽  
Vol 3 (3) ◽  
pp. 213-226 ◽  
Author(s):  
Chris Gratton ◽  
Greg Richards
Keyword(s):  
Price Competition ◽  
Home Market ◽  
Entry And Exit ◽  
High Concentration ◽  
German Market ◽  
Profit Margins ◽  
And Performance ◽  
The Uk ◽  
European Markets ◽  
Contestable Market

This paper analyses the development of the European package tour market paying particular attention to the two major package tour markets in Europe, the UK and Germany. It shows how both markets show high concentration with the top three firms supplying over half the market. Despite this similarity in market structure, UK and German package tour operators show great differences in conduct and performance. Whereas the UK market is characterized by fierce price competition, low profit margins, and high rates of entry and exit, the German market has none of these characteristics. It is argued that the UK market is a contestable market in Baumol's terms whereas the German market is a stable oligopoly. The competitiveness of the UK market has led firms to concentrate on the home market to protect market share. The oligopolistic nature of the German market has prevented more growth for German firms in their home market and has led to expansion into other European markets. These points are highlighted by an analysis of data from the FVW International survey of European tour operators for the period 1988–1993.

scholarly journals Model Peningkatan Loyalitas Pelanggan dengan Pengujian terhadap Servicescape, Kualitas Pelayanan dan Kepuasan Pelanggan

2018 ◽  
Vol 11 (2) ◽  
pp. 181
Author(s):  
Marno Nugroho ◽  
Sahrul Romadhon
Keyword(s):  
Customer Satisfaction ◽  
Product Quality ◽  
Customer Loyalty ◽  
Price Competition ◽  
Sampling Method ◽  
Sampling Techniques ◽  
Fashion Industry ◽  
Innovative Strategies ◽  
Market Leader ◽  
Improve Service Quality

In the era of globalization, the development of the fashion world with a variety of models and designs is increasing very rapidly. This condition has triggered a cycle of changing the style of dress that is dynamic, especially in the watch fashion industry. In addition to referring to the time the watch can also give a distinctive impression to the wearer. The sampling method is carried out using non probability sampling techniques by means of purposive sampling. By wearing a watch we can look more elegant. With a fairly large number of competitors, triggering the clock shop to focus on product quality and price competition, but the competition is not enough because there are still many aspects that can be used by the clock store to win the competition and become a market leader. Innovative strategies are needed to survive and win the competition, including strategies to improve service quality and rearrange Servicescape in this regard with regard to customer satisfaction and customer loyalty.

scholarly journals The Role of Medicine Pricing Policy for Improving the Affordability of Medicines

2018 ◽  
Vol 16 (2) ◽  
pp. 172
Author(s):  
Yusi Anggriani
Keyword(s):  
Developing Countries ◽  
Price Competition ◽  
Developed Countries ◽  
Pharmaceutical Product ◽  
Small Country ◽  
Pricing Policy ◽  
Middle Income ◽  
Bargaining Position ◽  
Medicine Prices ◽  
The Government

Medicine is a pharmaceutical product that has imperfect market characteristics. This affects affordability to the community, and therefore it is necessary for the government to regulate medicine prices. Medicine prices can be regulated in the medicine supply chain by the industry, importers, distributors and health facilities such as pharmacies, hospitals and medicine sellers. Developed and high income countries generally regulate the prices of medicines and are part of a health insurance system. In contrast with the situation in developed countries, medicine pricing regulation in developing countries and Lower Middle Income Countries is not well established. The regulation of mark-ups in distribution channels is the most common strategy used by LMIC. Small country with only a few pharmaceutical facilities has a weak bargaining position, generally the government cannot set prices. The application of cost-plus pricing is quite effective if it is implemented in a small country. In developing countries with a large market segment and adequate pharmaceutical industry facilities the price competition method is an effective strategy option to get lower prices. In practice, the application of  medicine pricing policy is dynamic. The medicine pricing system in a country can be changed or combined with other methods if the evaluation does not provide optimal results or generates unintended impacts.

Overview of Mechanical Harvesting in Florida Citrus

2001 ◽  
Author(s):  
G. K. Brown
Keyword(s):  
United States ◽  
Free Trade ◽  
Price Competition ◽  
The United States ◽  
Total Production ◽  
Worldwide Production ◽  
Economic Forces ◽  
Florida Citrus

Florida produces more citrus than all other states in the United States. In 1999, the total bearing area was estimated at 315,900 ha, and 245,000 ha were oranges (Anon, 2000). Recently, oranges averaged 77% of the total production and about 95% were processed. Orange production is projected to increase unless US weather, disease, labor, or economic forces act to depress production (Anon, 1993). Worldwide production and price competition in processed oranges are projected to decrease US grower returns, as free-trade conditions progress. Paper published with permission.

scholarly journals Beyond the home market effect: Market size and specialization in a multi-country world

2009 ◽  
Vol 79 (2) ◽  
pp. 259-265 ◽  
Author(s):  
Kristian Behrens ◽  
Andrea R. Lamorgese ◽  
Gianmarco I.P. Ottaviano ◽  
Takatoshi Tabuchi
Keyword(s):  
Market Size ◽  
Home Market ◽  
Home Market Effect ◽  
Market Effect

scholarly journals More Evidence on the Performance of Merger Simulations

2011 ◽  
Vol 101 (3) ◽  
pp. 51-55 ◽  
Author(s):  
Matthew C Weinberg
Keyword(s):  
Price Competition ◽  
Static Model ◽  
Demand Systems ◽  
Price Effects ◽  
Merger Simulation

Merger simulations are commonly used to simulate the effects of potential mergers. Despite the large resources devoted to merger review, little evidence exists on the accuracy of these methods. This paper uses the acquisition of Tambrands by Proctor and Gamble to provide evidence on the efficacy of merger simulation. Two simple demand systems are estimated under several identification assumptions and combined with a static model of price competition. Simulations predict small price effects of about 1 percent for the merging firms' brands, while direct estimates indicate the merger raised prices by 5–8 percent.

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