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Author: Yang Yang Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
This paper studies dynamic pricing and switching cost game under discrete mixed multinomial logit (MMNL) demand. Competing firms can dynamically change prices and redesign their products to in- crease or decrease switching costs in each period to influence the repeat consumers' purchase behavior. Consumers are divided into segments according to their purchase history and incur a one-time switching cost when they switch to the other firm. We characterize the conditions for the existence of equilibrium in single- and multi-period games and identify a key driver for firm's pricing and switching cost strategies: the ”demand-SC relationship.” Our theoretical results formally document three effects of switching costs: the anti-monopoly effect of small switching costs that boosts price competition, the monopoly effect of large switching costs, and the investment effect for forward-looking firms under any switching costs. For the joint effect of the pricing and switching cost strategies, a case study from the smartphone market shows that investing in switching cost can significantly increase firms' profit in a market with relatively small switching costs. However, under relatively large switching costs, switching cost competition may turn into a ”Prisoner's Dilemma” game. Our results show that switching costs could be, ironically, beneficial to consumers and detrimental to firms. The analysis explains why and how proactively controlling consumer switching costs profoundly boosts firms' profitability. Our tractable framework can be used by firms operating in dynamic environments to devise their competitive pricing and switching cost strategies.
Author: Yang Yang Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
This paper studies dynamic pricing and switching cost game under discrete mixed multinomial logit (MMNL) demand. Competing firms can dynamically change prices and redesign their products to in- crease or decrease switching costs in each period to influence the repeat consumers' purchase behavior. Consumers are divided into segments according to their purchase history and incur a one-time switching cost when they switch to the other firm. We characterize the conditions for the existence of equilibrium in single- and multi-period games and identify a key driver for firm's pricing and switching cost strategies: the ”demand-SC relationship.” Our theoretical results formally document three effects of switching costs: the anti-monopoly effect of small switching costs that boosts price competition, the monopoly effect of large switching costs, and the investment effect for forward-looking firms under any switching costs. For the joint effect of the pricing and switching cost strategies, a case study from the smartphone market shows that investing in switching cost can significantly increase firms' profit in a market with relatively small switching costs. However, under relatively large switching costs, switching cost competition may turn into a ”Prisoner's Dilemma” game. Our results show that switching costs could be, ironically, beneficial to consumers and detrimental to firms. The analysis explains why and how proactively controlling consumer switching costs profoundly boosts firms' profitability. Our tractable framework can be used by firms operating in dynamic environments to devise their competitive pricing and switching cost strategies.
Author: Mengzi Amy Guo Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
We consider an infinite-horizon multi-product dynamic pricing problem with reference effects in a monopolistic setting, where the reference price is an exponentially weighted average of historical prices. In each period, the demand follows the multinomial logit (MNL) model, where the utility depends on both the current price and the reference price, and consumers can have product-differentiated sensitivities to the price and the reference price. We conduct thorough analyses of the myopic pricing policy, including its solution, long-run convergence behavior, and performance guarantee compared to the long-term discounted revenue of the optimal pricing policy. Furthermore, we establish the structural properties of the optimal pricing policy. When consumers are loss-neutral towards all products, we explicitly characterize the optimal pricing policy if it converges to a steady state, and based on our characterization we show that the steady state price can be computed efficiently by a binary search. Interestingly, we find that such a convergence behavior of the optimal pricing policy heavily relies on the upper bound of the admissible price range, and a low price upper bound facilitates the policy to converge. In contrast, when consumers are gain-seeking towards all products, we prove that the optimal pricing policy admits no steady state regardless of the price range. Nevertheless, if consumers are only gain-seeking towards certain but not all products, the optimal pricing policy can potentially be convergent. In addition, our numerical experiments show that loss-aversion over all products does not rule out price fluctuations. This finding is at odds with the classic belief on loss-averse consumers and hence, highlights the significance of accounting for cross-product effects through the MNL demand.
Author: Kenneth Train Publisher: Cambridge University Press ISBN: 0521766559 Category : Business & Economics Languages : en Pages : 399
Book Description
This book describes the new generation of discrete choice methods, focusing on the many advances that are made possible by simulation. Researchers use these statistical methods to examine the choices that consumers, households, firms, and other agents make. Each of the major models is covered: logit, generalized extreme value, or GEV (including nested and cross-nested logits), probit, and mixed logit, plus a variety of specifications that build on these basics. Simulation-assisted estimation procedures are investigated and compared, including maximum stimulated likelihood, method of simulated moments, and method of simulated scores. Procedures for drawing from densities are described, including variance reduction techniques such as anithetics and Halton draws. Recent advances in Bayesian procedures are explored, including the use of the Metropolis-Hastings algorithm and its variant Gibbs sampling. The second edition adds chapters on endogeneity and expectation-maximization (EM) algorithms. No other book incorporates all these fields, which have arisen in the past 25 years. The procedures are applicable in many fields, including energy, transportation, environmental studies, health, labor, and marketing.
Author: Serguei Netessine Publisher: Springer Science & Business Media ISBN: 0387980261 Category : Business & Economics Languages : en Pages : 488
Book Description
This important book is by top scholars in supply chain management, revenue management, and e-commerce, all of which are grounded in information technologies and consumer demand research. The book looks at new selling techniques designed to reach the consumer.
Author: Mandy Ryan Publisher: Springer Science & Business Media ISBN: 1402057539 Category : Business & Economics Languages : en Pages : 265
Book Description
This work takes a fresh and contemporary look at the growing interest in the development and application of discrete choice experiments (DCEs) within the field of health economics. The book comprises chapters by highly regarded academics with experience of applying DCEs in the area of health. Thus the book is relevant to post-graduate students and applied researchers with an interest in the use of DCEs for valuing health and health care and has international appeal.
Author: Barbara J. Kanninen Publisher: Springer Science & Business Media ISBN: 1402053134 Category : Business & Economics Languages : en Pages : 344
Book Description
This book provides practical, research-based advice on how to conduct high-quality stated choice studies. It covers every aspect of the topic, from planning and writing the survey, to analyzing results, to evaluating quality. There is no other book on the market today that so thoroughly addresses the methodology of stated choice. Chapters are written by top-notch academics and practitioners in an accessible style, offering practical, tough advice.
Author: Timothy F. Bresnahan Publisher: University of Chicago Press ISBN: 0226074188 Category : Business & Economics Languages : en Pages : 508
Book Description
New goods are at the heart of economic progress. The eleven essays in this volume include historical treatments of new goods and their diffusion; practical exercises in measurement addressed to recent and ongoing innovations; and real-world methods of devising quantitative adjustments for quality change. The lead article in Part I contains a striking analysis of the history of light over two millenia. Other essays in Part I develop new price indexes for automobiles back to 1906; trace the role of the air conditioner in the development of the American south; and treat the germ theory of disease as an economic innovation. In Part II essays measure the economic impact of more recent innovations, including anti-ulcer drugs, new breakfast cereals, and computers. Part III explores methods and defects in the treatment of quality change in the official price data of the United States, Canada, and Japan. This pathbreaking volume will interest anyone who studies economic growth, productivity, and the American standard of living.
Author: Peter E. Rossi Publisher: John Wiley & Sons ISBN: 0470863684 Category : Mathematics Languages : en Pages : 368
Book Description
The past decade has seen a dramatic increase in the use of Bayesian methods in marketing due, in part, to computational and modelling breakthroughs, making its implementation ideal for many marketing problems. Bayesian analyses can now be conducted over a wide range of marketing problems, from new product introduction to pricing, and with a wide variety of different data sources. Bayesian Statistics and Marketing describes the basic advantages of the Bayesian approach, detailing the nature of the computational revolution. Examples contained include household and consumer panel data on product purchases and survey data, demand models based on micro-economic theory and random effect models used to pool data among respondents. The book also discusses the theory and practical use of MCMC methods. Written by the leading experts in the field, this unique book: Presents a unified treatment of Bayesian methods in marketing, with common notation and algorithms for estimating the models. Provides a self-contained introduction to Bayesian methods. Includes case studies drawn from the authors’ recent research to illustrate how Bayesian methods can be extended to apply to many important marketing problems. Is accompanied by an R package, bayesm, which implements all of the models and methods in the book and includes many datasets. In addition the book’s website hosts datasets and R code for the case studies. Bayesian Statistics and Marketing provides a platform for researchers in marketing to analyse their data with state-of-the-art methods and develop new models of consumer behaviour. It provides a unified reference for cutting-edge marketing researchers, as well as an invaluable guide to this growing area for both graduate students and professors, alike.
Author: Peter Davis Publisher: Princeton University Press ISBN: 1400831865 Category : Business & Economics Languages : en Pages : 1185
Book Description
This book combines practical guidance and theoretical background for analysts using empirical techniques in competition and antitrust investigations. Peter Davis and Eliana Garcés show how to integrate empirical methods, economic theory, and broad evidence about industry in order to provide high-quality, robust empirical work that is tailored to the nature and quality of data available and that can withstand expert and judicial scrutiny. Davis and Garcés describe the toolbox of empirical techniques currently available, explain how to establish the weight of pieces of empirical work, and make some new theoretical contributions. The book consistently evaluates empirical techniques in light of the challenge faced by competition analysts and academics--to provide evidence that can stand up to the review of experts and judges. The book's integrated approach will help analysts clarify the assumptions underlying pieces of empirical work, evaluate those assumptions in light of industry knowledge, and guide future work aimed at understanding whether the assumptions are valid. Throughout, Davis and Garcés work to expand the common ground between practitioners and academics.
Author: Michael J. Crawley Publisher: John Wiley & Sons ISBN: 9780470515068 Category : Mathematics Languages : en Pages : 953
Book Description
The high-level language of R is recognized as one of the mostpowerful and flexible statistical software environments, and israpidly becoming the standard setting for quantitative analysis,statistics and graphics. R provides free access to unrivalledcoverage and cutting-edge applications, enabling the user to applynumerous statistical methods ranging from simple regression to timeseries or multivariate analysis. Building on the success of the author’s bestsellingStatistics: An Introduction using R, The R Book ispacked with worked examples, providing an all inclusive guide to R,ideal for novice and more accomplished users alike. The bookassumes no background in statistics or computing and introduces theadvantages of the R environment, detailing its applications in awide range of disciplines. Provides the first comprehensive reference manual for the Rlanguage, including practical guidance and full coverage of thegraphics facilities. Introduces all the statistical models covered by R, beginningwith simple classical tests such as chi-square and t-test. Proceeds to examine more advance methods, from regression andanalysis of variance, through to generalized linear models,generalized mixed models, time series, spatial statistics,multivariate statistics and much more. The R Book is aimed at undergraduates, postgraduates andprofessionals in science, engineering and medicine. It is alsoideal for students and professionals in statistics, economics,geography and the social sciences.
Author: Yang Yang
Author: Yang Yang
Author: Mengzi Amy Guo
Author: Kenneth Train
Author: Serguei Netessine
Author: Mandy Ryan
Author: Barbara J. Kanninen
Author: Timothy F. Bresnahan
Author: Peter E. Rossi
Author: Peter Davis
Author: Michael J. Crawley