When is competition price‐increasing? The impact of expected competition on prices.
We examine the effect of expected competition on markups in a random utility model where the number of competing firms may differ across consumers. Firms observe consumers' utility shocks and set prices using personalized pricing. We derive a precise condition under which the expected markup across...
| Published in: | RAND Journal of Economics (Wiley-Blackwell) Vol. 55; no. 4; pp. 627 - 658 |
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| Format: | Article |
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Wiley-Blackwell
Dec2024
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| Online Access: | View this record in EBSCOhost |
| fields | @attributes: recordID: 1 pdfLink: plink: https://search.ebscohost.com/login.aspx?direct=true&db=ssf&AN=181730991&site=ehost-live header: @attributes: shortDbName: ssf uiTerm: 181730991 longDbName: Social Sciences Full Text (H.W. Wilson) uiTag: AN controlInfo: bkinfo: jinfo: jid: 07416261 56RJ jtl: RAND Journal of Economics (Wiley-Blackwell) issn: 07416261 maglogo: Y pubinfo: dt: Dec2024 vid: 55 iid: 4 pid: 480 pub: Wiley-Blackwell artinfo: ui: 181730991 10.1111/1756-2171.12487 ppf: 627 ppct: 31 formats: fmt: – @attributes: type: T – @attributes: type: C – @attributes: type: P size: 963KB tig: atl: When is competition price‐increasing? The impact of expected competition on prices. aug: au: Mangin, Sephorah affil: Research School of Economics, Australian National University su: Consumers Prices Extreme value theory Expected utility Price markup sug: subj: Consumers Prices Extreme value theory Expected utility Price markup keyword: auctions Bertrand competition extreme value theory markups personalized pricing random utility models auctions Bertrand competition extreme value theory markups personalized pricing random utility models ab: We examine the effect of expected competition on markups in a random utility model where the number of competing firms may differ across consumers. Firms observe consumers' utility shocks and set prices using personalized pricing. We derive a precise condition under which the expected markup across consumers can be represented by a simple expression involving consumers' expected utility and the expected demand. This delivers a general condition under which greater expected competition is price‐increasing. Whether this condition holds depends on the distribution of utility shocks, consumers' outside option, the expected number of competing firms, and the distribution of the number of firms competing for each consumer. pubtype: Academic Journal doctype: Article src: R language: English refInfo: copyright: @attributes: flag: N holdings: @attributes: islocal: N |
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