Signaling quality through prices in an oligopoly

• 成果类型: Article
• 署名作者: Janssen, Maarten C. W.; Roy, Santanu
• 署名单位: Southern Methodist University; University of Vienna
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2009.06.001
• 发表日期: 2010
• 页码: 192-207
• 关键词: Signaling; QUALITY; oligopoly; incomplete information

摘要

Firms signal quality through prices even if the market structure is very competitive and price competition is severe. In a symmetric Bertrand oligopoly where products may differ only in their quality and each firm's product quality is private information (unknown to consumers and to other firms), there exist symmetric fully revealing perfect Bayesian equilibria where low quality firms randomize over an interval of prices and high quality firms charge high prices. Signaling requires that the market power and rent of low quality firms be large enough and often this requires that high quality firms exercise sufficient market power. There is a unique symmetric fully revealing equilibrium satisfying the D1 criterion; in this equilibrium too, both low and high quality firms may exhibit considerable market power. Market power of high quality firms may persist even as the number of firms becomes arbitrarily large. Every D1 equilibrium involves some revelation of information. (C) 2009 Elsevier Inc. All rights reserved.