Piccione, Michele and Spiegler, Ran (2009): Price Competition under Limited Comparability.
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This paper studies market competition when firms can influence consumers' ability to compare market alternatives, through their choice of price "formats". We introduce random graphs as a tool for modelling limited comparability of formats. Our main results concern the interaction between firms' equilibrium price and format decisions and its implications for industry profits and consumer switching rates. We show that narrow regulatory interventions that aim to facilitate comparisons may have adverse consequences for consumer welfare. Finally, we argue that our limited-comparability approach provides a new perspective into the phenomenon of product differentiation.
|Item Type:||MPRA Paper|
|Original Title:||Price Competition under Limited Comparability|
|Keywords:||price competition, industrial organization, limited comparability, bounded rationality, framing, consumer protection, product differentiation, complexity|
|Subjects:||D - Microeconomics > D0 - General > D03 - Behavioral Economics; Underlying Principles
D - Microeconomics > D1 - Household Behavior and Family Economics > D18 - Consumer Protection
C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C79 - Other
L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets
D - Microeconomics > D4 - Market Structure and Pricing > D43 - Oligopoly and Other Forms of Market Imperfection
|Depositing User:||ran spiegler|
|Date Deposited:||16. Mar 2010 15:10|
|Last Modified:||14. Feb 2013 13:23|
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