Market share dynamics in a duopoly model with word-of-mouth communication

• 成果类型: Article
• 署名作者: Kovac, Eugen; Schmidt, Robert C.
• 署名单位: University of Bonn; Humboldt University of Berlin
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2013.11.010
• 发表日期: 2014
• 页码: 178-206
• 关键词: Dynamic duopoly; Homogeneous goods; Price competition; Consumer lock-in; Mixed pricing; Markov perfect equilibrium

摘要

We analyze dynamic price competition in a homogeneous goods duopoly, where consumers exchange information via word-of-mouth communication. A fraction of consumers, who do not learn any new information, remain locked-in at their previous supplier in each period. We analyze Markov perfect equilibria in which firms use mixed pricing strategies. Market share dynamics are driven by the endogenous price dispersion. Depending on the parameters, we obtain different 'classes' of dynamics. When firms are impatient, there is a tendency towards equal market shares. When firms are patient, there are extended intervals of market dominance, interrupted by sudden changes in the leadership position. (C) 2013 Elsevier Inc. All rights reserved.