, Dries Vermeulen Dynamic Competition with Consumer Inertia

Dynamic Competition with Consumer Inertia Dynamic Competition with Consumer Inertia

We study a framework where two duopolists compete repeatedly in prices and where chosen prices potentially affect future market shares, but certainly do not affect current sales. This assumption of consumer inertia causes (noncooperative) coordination on high prices only to be possible as an equilibrium for low values of the discount factor. In particular, high discount factors increase opportu...

Iwan Bos , Ronald Peeters , Erik Pot Competition versus Collusion : The Impact of Consumer Inertia

We consider a model of dynamic price competition to analyze the impact of consumer inertia on the ability of firms to sustain high prices. Three main consequences are identified: (i) maintaining high prices does not require punishment strategies when firms are sufficiently myopic, (ii) if buyers are sufficiently inert, then high prices can be sustained for all discount factors, and (iii) the ab...

Rudolf Müller , Dries Vermeulen Inefficiency of equilibria in query auctions with continuous valuations

Dynamic pricing in the presence of consumer inertia

Customer behavior modeling has gained increasing attention in the context of dynamic pricing. As an important behavior phenomenon, consumer inertia refers to consumers’ inherent tendency of purchase procrastination and may induce consumers to wait even when immediate purchase is optimal from an objective perspective. This paper studies a dynamic pricing problem for a monopolist firm selling per...

A Characterization of Separating Equilibrium in Multidimensional Signaling Games

We study separating equilibria (SE) in pure signaling games in which both type and signaling spaces aremultidimensional, the sender payoff is quasi-linear and receiver utility is independent of the signal (pure signaling case). We show for a large class of cost functions that a sender’s strategy constitutes an SE if and only if it satisfies a certain set of conditions. In particular, we show th...