Masuyama, Ryo (2024): Endogenous targeted pricing with vertical structure.
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Abstract
Targeted pricing is an aggressive strategy that steals demand from rivals. Previous studies have shown that a firm prefers targeted pricing to uniform pricing when another supply chain is vertically integrated and thus its downstream firm purchases an input at a constant price. This study relaxes the assumption that supply chains are vertically integrated. When supply chains are vertically separated, downstream firms face increasing input-supply function. Then, targeted pricing reduces the rival's demand and hence its input price, which intensifies competition. This negative effect is so severe in our Hotelling model that a firm prefers uniform pricing to targeted pricing when another supply chain is vertically separated.
Item Type: | MPRA Paper |
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Original Title: | Endogenous targeted pricing with vertical structure |
Language: | English |
Keywords: | targeted pricing, uniform pricing, vertical structure, supply chain management, Hotelling model. |
Subjects: | D - Microeconomics > D4 - Market Structure, Pricing, and Design > D43 - Oligopoly and Other Forms of Market Imperfection L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L10 - General L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets |
Item ID: | 121680 |
Depositing User: | Ryo Masuyama |
Date Deposited: | 11 Aug 2024 04:48 |
Last Modified: | 11 Aug 2024 04:53 |
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URI: | https://mpra.ub.uni-muenchen.de/id/eprint/121680 |