Personalized pricing and advertising: An asymmetric equilibrium analysis

• 成果类型: Article
• 署名作者: Anderson, Simon; Baik, Alicia; Larson, Nathan
• 署名单位: University of Virginia; American University
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2015.05.006
• 发表日期: 2015
• 页码: 53-73
• 关键词: Consumer targeting; price dispersion; mixed strategy equilibrium; Bertrand equilibrium; Price advertising

摘要

We study personalized price competition with costly advertising among n quality-cost differentiated firms. Strategies involve mixing over both prices and whether to advertise. In equilibrium, only the top two firms advertise, earning Bertrand-like profits. Welfare losses initially rise then fall with the ad cost, with losses due to excessive advertising and sales by the wrong firm. When firms are symmetric, the symmetric equilibrium yields perverse comparative statics and is unstable. Our key results apply when demand is elastic, when ad costs are heterogeneous, and with noise in consumer tastes. (C) 2015 Elsevier Inc. All rights reserved.