Hasan, Syed Akif and Subhani, Muhammad Imtiaz and Osman, Ms. Amber and Mehar, Ayub (2012): Pricing behavior of firms when consumers have an Imperfect Recall. Forthcoming in: American Journal of Scientific Research
Download (82kB) | Preview
Operating in markets which include the characteristics of both the perfect and imperfect competitions has never been so easy for a firm, while setting an acceptable price. Various firms show various pricing behavior to generate and maximize revenues. This paper is an attempt to encompass pricing behaviors of firms when consumers have imperfect recall for the past prices of the products, while giving a thought to ponder that which of the behaviors has an optimal rationale when a firm sets market price for a commodity. The findings concludes that firms set prices as similar as monopolist when the consumers of their products have imperfect recall for price they offered already in yore.
|Item Type:||MPRA Paper|
|Original Title:||Pricing behavior of firms when consumers have an Imperfect Recall|
|English Title:||Pricing behavior of firms when consumers have an Imperfect Recall|
|Keywords:||Imperfect recall, pricing behavior, monopolist, hotelling tradeoff|
|Subjects:||M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M0 - General
D - Microeconomics > D1 - Household Behavior and Family Economics > D11 - Consumer Economics: Theory
|Depositing User:||Muhammad Imtiaz Subhani|
|Date Deposited:||02. Jan 2012 15:55|
|Last Modified:||24. Apr 2015 05:46|
Baye, M. R. & J., Morgan. (2004). Price dispersion in the lab and on the internet: Theory and evidence. Journal of Economics, 35(3), 449-466.
Chen, Y., G., Iyer & A., Pazgal. (2005). Limited memory and market competition, available at http://groups.haas.berkeley.edu/marketing/ PAPERS/IYER/Memory_july05_final.pdf.
Diamond, P., A. (1971). A model of price adjustment. Journal of Economic Theory, 3(2), 156-168.
Dow, J. (1991). Search decisions with limited memory. Review of Economic Studies, 58(1), 1-14.
Gabaix, X. & D., Laibson. (2006). Shrouded attributes, consumer myopia, and information suppression in competitive markets. Quarterly Journal of Economics, 121(2), 505-540.
Gabaix, X. & D., Laibson. (2004). Competition and consumer confusion; Econometric Society 2004 North American Summer Meetings 663, Econometric Society.
Gabaix, X., D., Laibson. & H., Li. (2005). Extreme value theory and the effects of competition on profits, mimeo.
Hehenkamp, B. (2002). Sluggish consumers: An evolutionary solution to the Bertrand paradox. Games and Economic Behavior, 40, 44-76.
Monroe, K. B. & A. Y., Lee. (1999). Remembering versus knowing: Issues in buyers’ processing of price information. Journal of the Academy of Marketing Science, 27(2), 207-225.
Pan, X., B. T., Ratchford. & V. Shankar. (2004). Price dispersion on the internet: A review and directions for future research. Journal of Interactive Marketing, 18(4), 116-135.
Spiegler, R. (2006). Competition over agents with boundedly rational expectations. Theoretical Economics, 1(2), 207-231.
Varian, H. R. (1980). A model of sales. American Economic, 70(4), 651-59.