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on Industrial Organization |
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Issue of 2005‒08‒03
two papers chosen by |
| By: | Maria Belen Usero; Zulima Fernandez |
| Abstract: | This study examines the relationship between erosion of the first-mover’s market share and the differences in competitive behaviour of pioneer firms and followers. Particularly, we pay particular attention to market actions related to innovation, pricing and promotion, and to non-market actions related to judicial issues. The empirical study has been carried out with companies that are present in a dynamic context, such as the European mobile telephone industry. Our results show that when followers take more non-market actions than pioneers the negative effect on the firstentrant’s advantage is more significant. On the contrary, we have not found a significant impact of innovating and pricing actions. |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:cte:wbrepe:wb054812&r=ind |
| By: | Dirk Bergemann; Karl Schlag |
| Abstract: | We consider a robust version of the classic problem of optimal monopoly pricing with incomplete information. The robust version of the problem is distinct in two aspects: (i) the seller minimizes regret rather than maximizes revenue, and (ii) the seller only knows that the true distribution of the valuations is in a neighborhood of a given model distribution. We characterize the robust pricing policy as the solution to a minimax problem for small and large neighborhoods. In contrast to the classic monopoly policy which is a single deterministic price, the robust policy is always a random pricing policy, or equivalently, a multi-item menu policy. The responsiveness of the robust policy to an increase in risk is determined by the curvature of the static profit function. |
| Keywords: | Monopoly, Optimal Pricing, Regret, Robustness |
| JEL: | C79 D82 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:eui:euiwps:eco2005/10&r=ind |