The article is on pricing strategy and defines the price competition. It states that the nature of consumer response to price promotion is to substantial importance to academics as well as to managers and has receive considerable attentions in the literature. A signinficant driver of the primary demand effect is...
Consumers paid an estimated $61 billion in residential real estate brokerage fees in 2004. Because commission rates have remained relatively uniform--regardless of market conditions, home prices, or the effort required selling a home - some economists have questioned the extent of price competition in the residential real estate brokerage industry....
The challenge lies in being the best at value packaging the business and convincing customers that they are getting value which makes their purchases worth more than the price they are paying. One has many more reasons for people to purchase from oneself than just price. One needs to have...
This article analyses the impact of the reference price system on the price-setting strategies of the pharmaceutical firms and on the level of generic usage. This model is the first to take explicitly into account the impact of the reference price mechanism on the level of competition between brand name...
This paper is a study of a model where retailers endogenously engage in both brand advertising to attract loyal customers as well as informational advertising, which consists of deciding whether and what price to list on a price comparison site. Price levels are also predicted to depend systematically on firms'...
We analyze platform competition for content in the presence of strategic interactions between content distributors and content providers. We provide a model of bargaining and price competition within these industries, and show that whether or not a piece of content ends up exclusive to one platform depends crucially on whether...
The paper finds evidence that price changes after portability's announcement but before implementation are consistent with rational expectations assumptions of theoretical switching costs models. Do switching costs reduce or intensify price competition in markets where firms charge the same price to old and new consumers? The answer is theoretically ambiguous...
This paper studies the effects of regulatory settings and competitive environment on the performance of second-Generation (2G) mobile telecommunication. Simultaneously three related dimensions of sector performance are considered: entry time, service prices and diffusion. It is found that standardization accelerates 2G entry and diffusion, although within-standards competition triggers less aggressive...
The author has developed a model of capital tax/subsidy competition in which imperfectly competitive firms choose both the number and the location of the plants they operate. The endogenous presence of horizontal multinationals is shown to attenuate the "Race to the bottom" and yields some results that are opposite to...
After twenty-five years of a consistent health insurance underwriting cycle, the pattern of insurer profitability changed greatly in the 1990s, raising speculation about the future. The article concludes from interviews with industry experts that health plan competition and limits on plans' ability to predict costs will continue to drive a...
While the advent of the Internet has the potential to reduce the cost of searching for products, search costs are still not zero. As a consequence, Internet retailers lacking the tremendous presence of an Amazon.com but who have lower prices have incentive to purchase the services of a price comparison...
The Internet has introduced a variety of online buying services that expand the reach of sellers and reduce search costs for buyers. In markets in which traditional outlets establish prices through bargaining, these online intermediaries have also altered the price setting process. Perhaps the most well known example is Autobytel.com...
The nature of consumer response to a promotion is of substantial importance to managers and has received considerable attention in the literature. The received wisdom is that main effect of promotion is on brand switching and its impact on primary demand is marginal at best. Behavioral studies have shown that...
The purpose of this paper is to analyze the impact of advertising and quality decisions on price competition in a duopoly setting. Firms are able to differentiate their products vertically and use persuasive advertising to increase consumer brand loyalty. The model predicts that the high quality firm will advertise more...
From the executive summary: ‘A potentially important development in U.S. merger Law is the emergence of the so-called “market for innovation.” The subject has been embraced by the Federal antitrust enforcement agencies. Theoretically, a “market for innovation” is recognition of a mode of non-price competition. Key enforcement officials believe that...
A leading manufacturer of consumer goods faced eroding profits. Increasing raw material costs and retailer price competition had triggered a downward spiral of industry pricing, leading to declining profits. The company asked McKinsey to evaluate whether and how customers and other players could accommodate price increases. McKinsey team conducted extensive...
First-price auctions and multilateral negotiations are experimentally compared after introducing horizontal product differentiation into a standard procurement setting. The two institutions yield the buyer the same surplus, a difference from prior findings with homogeneous products that results from differentiation's influence on the sellers' pricing behavior. In particular, this paper finds...
From the executive summary: 'Under plausible conditions, entry into an initially monopolized market leads to higher prices for most consumers. Entry can induce a misallocation of goods to consumers, segment the market in a way that transfers surplus to producers, and undermine aggressive pricing by the incumbent. Post entry, firms...
Cost/Benefit Considerations and Asymmetric Industry Structures Asymmetries arise and persist provided that one firm has a strategic advantage over the other. The tangible form of this advantage is that one firm can get the other to stop investing; the authors have shown that this is the case under price competition...
There are two opposite trends in the Internet market: high competition in the prices of commoditised network services that are usually "Best effort", and ISPs striving for profitability. In this market setting M3I pricing technology may enable service differentiation and profit generation. ISPs market is characterized by intense price competition...
