695 research outputs found
Market Share Dynamics in a Model with Search and Word-of-Mouth Communication
This paper analyzes price competition in an infinitely repeated duopoly game. In each period, consumers remember the existence and location of their previous supplier. New information is gathered via search or word-of-mouth communication. Market outcomes are history-dependent, and the Markov perfection refinement is used to narrow the set of equilibria. Firms are shown to use mixed pricing strategies in equilibrium. The resulting price dispersion generates non-trivial market share dynamics. The goal of the paper is to characterize these dynamics, and to reveal the driving forces behind them
Market Share Dynamics in a Model with Search and Word-of-Mouth Communication
This paper analyzes price competition in an infinitely repeated duopoly game. In each period, consumers remember the existence and location of their previous supplier. New information is gathered via search or word-of-mouth communication. Market outcomes are history-dependent, and the Markov perfection refinement is used to narrow the set of equilibria. Firms are shown to use mixed pricing strategies in equilibrium. The resulting price dispersion generates non-trivial market share dynamics. The goal of the paper is to characterize these dynamics, and to reveal the driving forces behind them.repeat purchasing; search; customer loyalty; lock-in; mixed pricing
Modeling competition between two pharmaceutical drugs using innovation diffusion models
The study of competition among brands in a common category is an interesting
strategic issue for involved firms. Sales monitoring and prediction of
competitors' performance represent relevant tools for management. In the
pharmaceutical market, the diffusion of product knowledge plays a special role,
different from the role it plays in other competing fields. This latent feature
naturally affects the evolution of drugs' performances in terms of the number
of packages sold. In this paper, we propose an innovation diffusion model that
takes the spread of knowledge into account. We are motivated by the need of
modeling competition of two antidiabetic drugs in the Italian market.Comment: Published at http://dx.doi.org/10.1214/15-AOAS868 in the Annals of
Applied Statistics (http://www.imstat.org/aoas/) by the Institute of
Mathematical Statistics (http://www.imstat.org
Recommended from our members
An Agent Based Simulation of Smart Metering Technology Adoption
Based on the classic behavioural theory βthe Theory of Planned Behaviourβ, we develop an agent-based model to simulate the diffusion of smart metering technology in the electricity market. We simulate the emergent adoption of smart metering technology under different management strategies and economic regulations. Our research results show that in terms of boosting the take-off of smart meters in the electricity market, choosing the initial users on a random and geographically dispersed basis and encouraging meter competition between energy suppliers can be two very effective strategies. We also observe an βS-curveβ diffusion of smart metering technology and a βlock-inβ effect in the model. The research results provide us with insights as to effective policies and strategies for the roll-out of smart metering technology in the electricity market
The Effects of Imbalanced Competition on Demonstration Strategies
This paper analyzes the effect of competition on product demonstration decisions. Pre-purchase product demonstration enables marketers to differentiate products that are ex-post differentiated but are judged according to perceived fit, rather than actual fit, due to pre-purchase consumer uncertainty. Imbalanced competition accompanied by fit uncertainty motivates the follower to offer demonstrations to avoid a price war. This paper explores the conditions that lead the leader to retaliate. In addition to effects on quantity, competition may increase the quality of demonstrations offered by the leader. We analyze a business case, showing that competition may increase the demonstration intensity and that the leading manufacturerβs response to changes in competition is stronger than the responses of the followers. Our research has the potential to aid mangers in formulating demonstration strategies and in responding to competitorsβ demonstration efforts.Imbalanced competition, product demonstration, differentiation, test-drive, price war, Political Economy, Production Economics,
- β¦