nep-ind New Economics Papers
on Industrial Organization
Issue of 2005‒08‒03
two papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. FIRST COME, FIRST SERVED: AN ANALYSIS OF PIONEER AND FOLLOWER FIRMS' MARKET AND NONMARKET ACTIONS IN THE EUROPEAN MOBILE TELEPHONE INDUSTRY By Maria Belen Usero; Zulima Fernandez
  2. Robust Monopoly Pricing: The Case of Regret By Dirk Bergemann; Karl Schlag

  1. 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
  2. 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

This nep-ind issue is ©2005 by Kwang Soo Cheong. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at http://nep.repec.org. For comments please write to the director of NEP, Marco Novarese at <director@nep.repec.org>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.