Segmented switchers and retailer pricing strategies

Empirical studies reveal a surprisingly wide variety of price promotion strategies among retailers, even among Internet sellers of undifferentiated homogenous goods such as books and music CD’s. Several empirical findings remain puzzling, particularly that within the same market some small retailers decide to deeply discount, while other small retailers forgo the price-sensitive switchers and price high to play their niche. We present theoretical and empirical analyses that address these varied pricing strategies. Our model of three asymmetric firms shows that under multiple switcher segments, where different switchers compare prices at different retailers, firm-specific loyalty is not sufficient to explain the variety of retailer pricing strategies. We demonstrate that a retailer’s pricing strategy is driven by the ratio of the size of switcher segments for which the retailer competes to its loyal segment size. The relative switcher-to-loyal ratios among retailers explain when a firm is more or less inclined to discount deeply or frequently. We thereby identify when a small firm finds it optimal to play the niche and price high, despite having few loyals, or to discount and go for the switchers. Our analysis reveals several interesting findings, such as a small firm that benefits from strategically limiting its access to switchers. The results of two empirical studies confirm our model’s predictions for varied retailer pricing strategies in the context of Internet booksellers

Theory and evidence on pricing by asymmetric oligopolies

We present an analysis of markets with many asymmetrically positioned retailers that compete for the business of both informed and uninformed customers for a homogenous good, such as software, music, book or a brand-name appliance. We show that two forms of asymmetry, one related to loyal segment sizes of retailers and one related to the positioning of firms, completely explain the observed price dispersion in such markets and the multitude of asymmetrical strategies adopted by retailers. The stochastic dominance of empirical mixed strategy measures is used to test the theory with data on 968 books from 10 online retailers

Throughput Analysis of Buffer-Constrained Wireless Systems in the Finite Blocklength Regime

In this paper, wireless systems operating under queueing constraints in the form of limitations on the buffer violation probabilities are considered. The throughput under such constraints is captured by the effective capacity formulation. It is assumed that finite blocklength codes are employed for transmission. Under this assumption, a recent result on the channel coding rate in the finite blocklength regime is incorporated into the analysis and the throughput achieved with such codes in the presence of queueing constraints and decoding errors is identified. Performance of different transmission strategies (e.g., variable-rate, variable-power, and fixed-rate transmissions) is studied. Interactions between the throughput, queueing constraints, coding blocklength, decoding error probabilities, and signal-to-noise ratio are investigated and several conclusions with important practical implications are drawn

An Energy Efficiency Perspective on Training for Fading Channels

In this paper, the bit energy requirements of training-based transmission over block Rayleigh fading channels are studied. Pilot signals are employed to obtain the minimum mean-square-error (MMSE) estimate of the channel fading coefficients. Energy efficiency is analyzed in the worst case scenario where the channel estimate is assumed to be perfect and the error in the estimate is considered as another source of additive Gaussian noise. It is shown that bit energy requirement grows without bound as the snr goes to zero, and the minimum bit energy is achieved at a nonzero snr value below which one should not operate. The effect of the block length on both the minimum bit energy and the snr value at which the minimum is achieved is investigated. Flash training schemes are analyzed and shown to improve the energy efficiency in the low-snr regime. Energy efficiency analysis is also carried out when peak power constraints are imposed on pilot signals.Comment: To appear in the Proc. of the 2007 IEEE International Symposium on Information Theor