Both the “law of one price” and Bertrand’s (1883) prediction of marginal cost pricing for homogeneous goods rest on the assumption that consumers will choose the best price. In practice, consumers often fail to choose the best price because they search too little, become confused comparing prices, and then show excessive inertia through too little switching away from past choices or default opt...

This experimental study examines whether the content of information and the timing of its dissemination affects firms’ market power. We construct laboratory markets that capture the key features of a price-setting, differentiated goods, duopoly model analyzed by Anderson and Renault (2000). Consumers must typically incur a search cost in order to obtain any information, but a fraction of the co...

We consider the dynamic pricing problem of a monopolist firm in a market with repeated interactions, where demand is sensitive to the firm’s pricing history. Consumers have memory and are prone to human decision making biases and cognitive limitations. As the firm manipulates prices, consumers form a reference price that adjusts as an anchoring standard based on price perceptions. Purchase deci...

M consumer durable retailers often do not advertise their prices and instead ask consumers to call them for prices. It is easy to see that this practice increases the consumers’ cost of learning the prices of products they are considering, yet firms commonly use such practices. Not advertising prices may reduce the firm’s advertising costs, but the strategic effects of doing so are not clear. O...

Rice plays an especial role in Iranian households' nutrition basket. The volatilities of its price during recent years caused consumers' dissatisfaction. This paper investigates spillover effects of price volatilities (at the wholesale and retail levels) in the Guilan Province rice market. The Generalized Autoregressive Conditional Hetroscedasitic (GARCH) model was used for the monthly time per...

In this paper we estimate a dynamic model where consumers are searching for the best good and learning about the price-quality relationship in the Bayesian fashion. Thereby we relax one of the critical assumptions made in the existing studies on empirics of search: that consumers know the distribution o¤ers and therefore do not take into account the information collected during the search proce...

selecting a set of features and price for new product is one of the most important and difficult decisions for any firm. for its implementation firms require information by demand of consumers about product features,the cost of providing these features and reaction of existing competitors to new product entry. in this research, with the help of game theory, the various positions of new product ...

I revisit the model of market competition with boundedly rational consumers due to Spiegler (2006), in which firms compete in price distributions and consumers use a naive sampling procedure to evaluate them. I assume that firms can assign weight to arbitrarily low prices, and consumers have a non-trivial ex ante outside option. In symmetric Nash equilibrium, firms charge a high ‘‘regular price...

The uniform delivered price is the price contains mill price and transportation cost. Although the firms bear the transportation cost, practically the firms would pass all or part of transportation cost through to consumers. The research finds that, as the demand curve slopes downward or there exists competitors or potential competitors, the U.D.P. firms neither can pass all of transportation c...