2022
DOI: 10.1002/mde.3528
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Pricing leadership decisions of competing firms with consumer learning

Abstract: 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 fo… Show more

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Cited by 4 publications
(3 citation statements)
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“…in which the parameter t is the unit cost of the imperfect matching (Hou et al, 2022;Król, 2012). To simplify our analysis, we let t ¼ 1.…”
Section: Preliminariesmentioning
confidence: 99%
See 1 more Smart Citation
“…in which the parameter t is the unit cost of the imperfect matching (Hou et al, 2022;Król, 2012). To simplify our analysis, we let t ¼ 1.…”
Section: Preliminariesmentioning
confidence: 99%
“…Denote the prices of Products 1 and 2 in the case with technology sharing as p1 and p2, respectively. For the consumer located at a distance of x0.25em()x[]0,1 to Manufacturer 1 and at a distance of 1x to Manufacturer 2, we can formulate its utility from consuming Products 1 and 2, respectively, as follows: {u1=()1+γqt·xp1u2=()1+γqt·()1xp2 in which the parameter t is the unit cost of the imperfect matching (Hou et al, 2022; Król, 2012). To simplify our analysis, we let t=1 9…”
Section: Model Descriptionmentioning
confidence: 99%
“…When SLO is high, the first-stage price is lower than the second-stage price. In addition to monopoly market, reviews will also play an important role in firms' decisions under the competitive market (Hou et al, 2022). Unlike the monopoly market, Li et al (2011) find that online reviews might intensify price competition, leading to a decline in profit.…”
Section: Literature Reviewmentioning
confidence: 99%