Dynamic Pricing Competition with Strategic Customers Under Vertical Product Differentiation

• 成果类型: Article
• 署名作者: Liu, Qian; Zhang, Dan
• 署名单位: Hong Kong University of Science & Technology; University of Colorado System; University of Colorado Boulder
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.1120.1564
• 发表日期: 2013
• 页码: 84-101
• 关键词: Dynamic pricing; pricing competition; Strategic Customers; Vertical differentiation

摘要

We consider dynamic pricing competition between two firms offering vertically differentiated products to strategic customers who are intertemporal utility maximizers. We show that price skimming arises as the unique pure-strategy Markov perfect equilibrium in the game under a simple condition. Our results highlight the asymmetric effect of strategic customer behavior on quality-differentiated firms. Even though the profit of either firm decreases as customers become more strategic, the low-quality firm suffers substantially more than the high-quality firm. Furthermore, we show that unilateral commitment to static pricing by either firm generally improves profits of both firms. Interestingly, both firms enjoy higher profit lifts when the high-quality firm commits rather than when the low-quality firm commits.