Debt as an Entry Deterrent under Bertrand Price Competition

1999 ◽  
Vol 32 (4) ◽  
pp. 1069 ◽  
Author(s):  
Dean Showalter
Keyword(s):  
Price Competition ◽  
Bertrand Price Competition

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.

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 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 Price Competition and Setup Cost

Mathematics ◽  
2021 ◽  
Vol 9 (3) ◽  
pp. 289
Author(s):  
Rui Ota ◽  
Hiroshi Fujiu
Keyword(s):  
Price Competition ◽  
Product Market ◽  
New Product ◽  
Government Policies ◽  
Differentiated Products ◽  
Setup Cost ◽  
Price Leadership ◽  
Setup Costs ◽  
Bertrand Price Competition

Few studies analyze the endogenous emergence of price competition in a new product market. This paper analyzes two differentiated products, an existing product and a newly introduced substitutable product, and investigates conditions under which a price competition endogenously emerges in a new product market in the context of a choice between engaging in price competition and holding price leadership. We demonstrate that Bertrand price competition emerges when the setup cost for the new product is high enough. This result implies that government policies reducing setup costs such as subsidies could change the type of competition to price leadership in a new product market.

A Contest of Payment Contracts: A Structural Approach on How Chinese Firms Coped with Default Risk of Trade Credit

2018 ◽  
Vol 5 (1) ◽  
Author(s):  
Mariko Watanabe
Keyword(s):  
Default Risk ◽  
Driving Force ◽  
Price Competition ◽  
Trade Credit ◽  
Transition Period ◽  
Chinese Government ◽  
Administrative Control ◽  
Management Capacity ◽  
Bertrand Price Competition ◽  
The One

Abstract During the transition period from a planned economy to a market economy in the 1990s of China, there was a considerable accrual of deferred payment, and default due to inferior enforcement institutions. This is a very common phenomenon in the transition economies at that time. The Chinese government attempted in vain to deal with this problem by legislation of related institutions and administrative control. Interviews with home electronics appliance firms revealed that firms were able to cope with this problem by adjusting their sales mechanisms (found four types), and the benefit of institutions was limited. A theoretical analysis here found that spot and integration are inferior to the two contract mechanisms in terms of cost and price: a contract with a rebate on volume and prepayment against an exclusive agent can realize the lowest cost and price, and maximize social welfare. Hence, through Bertrand price competition, any of two contract mechanisms is selected to dominate the supply behavior. The empirical part showed that sales contract mechanisms employed by the brand gradually converged into the one with a rebate on volume an against exclusive agent, as it realized the lowest cost. A firm who initiated this mechanism gained the largest share in the market. The competition is the driving force of the convergence of mechanisms and improvement risk management capacity.

Spatial Competition and Merger

2004 ◽  
Vol 4 (1) ◽  
Author(s):  
Richard S Higgins ◽  
Paul A Johnson ◽  
John T Sullivan
Keyword(s):  
Equilibrium Model ◽  
Price Competition ◽  
Spatial Competition ◽  
Price Increase ◽  
Bertrand Competition ◽  
Merger Analysis ◽  
Substitute Products ◽  
Bertrand Price Competition ◽  
Price Discriminate ◽  
Spatially Differentiated

Abstract We consider a computational equilibrium model of spatially differentiated Bertrand competition and apply it to merger analysis. Two pricing paradigms are studied: one where firms cannot price discriminate among customers and one where firms can. The model encompasses many details that make it highly realistic. A detailed example illustrates several insights into merger analysis that are not readily apparent through traditional means. The most important of these is that merger of substitute products under Bertrand price competition need not result in a price increase.

COMPATIBILITY STRATEGIES FOR AN ASYMMETRIC DUOPOLY CONSIDERING NETWORK EFFECTS AND MARKET SHARES

2011 ◽  
Vol 08 (04) ◽  
pp. 615-634 ◽  
Author(s):  
FAN-CHEN TSENG ◽  
KUANG-CHENG ANDY WANG
Keyword(s):  
Price Competition ◽  
Market Failure ◽  
Network Effects ◽  
Network Effect ◽  
Second Stage ◽  
Market Shares ◽  
Key Factor ◽  
Governmental Intervention ◽  
Bertrand Price Competition ◽  
Asymmetric Duopoly

The network effect is a key factor influencing the development of e-business and technological innovation. At the same time, compatibility decisions can determine the success or failure of businesses and technologies. This study explores the compatibility strategies in the context of network effects using a two-stage game-theoretical model for a duopoly. In the first stage, two firms make their compatibility decisions, and in the second stage, two firms are engaged in Bertrand price competition. Major findings are (1) other things being fixed, two firms are more likely to be compatible with each other when they have similar market shares, (2) the compatibility decisions of firms will not be influenced by consumers' switching costs, (3) the order of their compatibility decisions will not change the resulting equilibrium, and (4) based on firms' compatibility decisions, the Bertrand price competition may still lead to market failure, necessitating governmental intervention or regulations.

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