We consolidate and generalize some results on price determination and ef®ciency in search equilibrium. Extending models by Rubinstein and Wolinsky and by Gale, heterogeneous buyers and sellers meet according to a general matching technology and prices are determined by a general bargaining condition. When the discount rate r and search costs converge to 0, we show that prices in all exchanges a...

Vol. XLIV (February 2007), 42–56 42 © 2007, American Marketing Association ISSN: 0022-2437 (print), 1547-7193 (electronic) *Markus Christen (e-mail: [email protected]) and Miklos Sarvary (e-mail: [email protected]) are Associate Professors of Marketing, INSEAD. The authors thank Pierre Chandon and participants of the 25th HEC/ESSEC/INSEAD seminar for their helpful comments on a...

We develop an analytical framework to investigate the competitive implications of dynamic pricing technologies (DPT), which enable precise inferring of consumers’ valuations for firms’ products and personalized pricing. These technologies enable first-degree price discrimination: firms charge different prices to different consumers, based on their willingness to pay. We first show that, even th...

By employing dynamic pricing, the act of changing prices over time within a marketplace, sellers have the potential to increase their revenue by selling goods to buyers “at the right time, at the right price.” As dynamic pricing systems become necessary as a competitive maneuver and as market mechanisms become more complex, there is a greater need for pricing agents to be used, and also a great...

Standard pricing theories consider consumers without temptation. With temptation and costly self-control, consumers dislike choice sets with tempting alternatives. We study firms’ strategy against such consumers, using Gul–Pesendorfer preferences and a game where firms compete by offering menus. JEL Classification: D43, L13, L15

In this paper, we study pricing situations where a firm provides a price quote in the presence of uncertainty in the competitive landscape and the preferences of the buyer. We review two possible customized-pricing bidresponse models used in practice which can be developed from the historical information available to the firm based on previous bidding opportunities. We show how these models may...

This paper studies the problem of multi-period pricing for perishable products in a competitive (oligopolistic) market. We study non cooperative Nash equilibrium policies for sellers. At the beginning of the time horizon, the total inventories are given and additional production is not an available option. The analysis for periodic production-review models, where production decisions can be mad...

We analyze markets with both horizontally and vertically differentiated products under both monopoly and duopoly. In the base model with two consumer types, we identify conditions under which entry prompts an incumbent to expand or contract its low end of the product line. Our analysis offers a novel explanation for the widespread use of “fighting brands” and “product line pruning.” We also ext...

In the context of a socially networked economy, this paper demonstrates an Edgeworth equivalence between the set of competitive allocations and the core. Each participant in the economy may have multiple links with other participants and the equilibrium network may be as large as the entire set of participants. A clique is a group of people who are all connected with each other. Large cliques, ...