Endogenous Price Leadership and Product Positioning

Gilpatric, Scott M.; Li, Youping

doi:10.1007/s11151-020-09752-4

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2022

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“…Cheng and Tabuchi (2020) prove that the strategy of producing more varieties is a first‐mover advantage in a multiproduct duopoly. Gilpatric and Li (2021) find that taking the lead in pricing would harm the profit of a firm with a location advantage in that it is closer to most consumers. Chung and Lee (2017) find that the retailer does not always prefer price leadership over the manufacturer, while its strategies depend on its price leadership type and the degree of substitutability of its products with those of a competing manufacturer.…”

Section: Literature Reviewmentioning

confidence: 99%

Pricing leadership decisions of competing firms with consumer learning

2022

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We consider two competing firms that sell two quality‐differentiated products over two periods, in which the high‐ or low‐quality firms have the option to act as a pricing leader or follower in the first or second periods. Two groups of consumers make their purchase decisions in the first or second periods, with the former consumers using the experience available to the latter from online communities (e.g., TikTok). Our analysis indicates that competition intensity and consumers' reviews are two interacting forces that steer the equilibrium decisions of the two competing firms.

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Section: Literature Reviewmentioning

confidence: 99%