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We study imperfect and monopolistic competition with asymmetric preferences over a variety of goods provided by heterogeneous firms. We show how to compute equilibria through the Morishima elasticities of substitution. Simple pricing rules and closed-form solutions emerge under monopolistic...
Persistent link: https://www.econbiz.de/10012952748
We study monopolistic competition with asymmetric preferences over a variety of goods provided by heterogeneous firms and show how to compute equilibria (which approximate Cournot and Bertrand equilibria when market shares are negligible) through the Morishima measures of substitution. Further...
Persistent link: https://www.econbiz.de/10014090526
A methodology is proposed to estimate structural models of product line competition. This methodology enables researchers to estimate demand systems accounting for the endogeneity of the mix of products available in each market, an issue which is typically ignored in the empirical literature. In...
Persistent link: https://www.econbiz.de/10013028801
How should firms optimally choose prices and promotional strategies and how should they position their products when consumers are "relative thinkers"? We provide answers in a model that extends the seminal contributions of Varian (1980) and Narasimhan (1988) and derive both managerial...
Persistent link: https://www.econbiz.de/10012241980
Revisions incorporated into the Horizontal Merger Guidelines in 2010 claim that the Department of Justice and the Federal Trade Commission consider anticompetitive effects to product “variety” when evaluating mergers. The Guidelines do not, however, explain the methodology or tools that can...
Persistent link: https://www.econbiz.de/10014143894
Consumers may purchase durable goods on the basis of short-term "temptation," as well as their long-term interests. I adapt Gul and Pesendorfer's (2001) representation of self-control preferences to a market for durable goods. Consumers' temptation will increase profit, and can ameliorate a...
Persistent link: https://www.econbiz.de/10012987707
This paper analyzes two aspects of the standard sequential consumer search model: (1) the role of the consumer's ex ante information structure on market outcomes and search behavior; and (2) the effect of imperfect recall on market outcomes and search behavior. Simulated equilibria are generated...
Persistent link: https://www.econbiz.de/10013075811
This study reveals two different rationales for consumer surplus-enhancing collusion. The first model considers two competitive firms in the final product market, each with one essential patent necessary for production. The equilibrium price under collusion is lower than the price under...
Persistent link: https://www.econbiz.de/10012894295
In financial markets where consumers can only be reached through an advisor, product providers usually compete indirectly for consumers through commissions to advisors. Therefore, a regulatory ban on commissions may restrict this competition. We formulate a theoretical model in order to study...
Persistent link: https://www.econbiz.de/10012897934
Many consumers rely on professional advisors when purchasing financial products. We compare fee-based and commission-based remuneration systems for financial advisors from a total welfare perspective in a theoretical model, where advisors face transaction costs from persuading consumers of a...
Persistent link: https://www.econbiz.de/10012897935