Two Essays On Strategic Pricing
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Two Essays On Strategic Pricing
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Author : Hong Yuan
language : en
Publisher:
Release Date : 2005
Two Essays On Strategic Pricing written by Hong Yuan and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2005 with categories.
Two Essays On Digital And Multi Channel Marketing Pricing Strategy
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Author : Mengzhou Zhuang
language : en
Publisher:
Release Date : 2019
Two Essays On Digital And Multi Channel Marketing Pricing Strategy written by Mengzhou Zhuang and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with categories.
Essays On Strategic Pricing And Quality Decisions
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Author : Ji-Hung Ryan Choi
language : en
Publisher:
Release Date : 2016
Essays On Strategic Pricing And Quality Decisions written by Ji-Hung Ryan Choi and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016 with categories.
In the first essay, we study a business-to-business (B2B) contract between truck carriers (sellers) and shippers (buyers). With the increase in the price of oil, fuel surcharges are now widely used in the transportation industry. However, there is suspicion that truck carriers use fuel surcharges to make profits beyond the cost of fuel. The purpose of this paper is to apply economic theory to investigate why freight carriers impose fuel surcharges instead of raising the freight rate. We analyze how well the formula for fuel surcharges widely used in the transportation industry mirrors truck carriers' fuel cost changes. The analysis shows that, in a market where both the seller and the buyer are risk averse against the actual fuel price volatility, imposing a fuel surcharge can prevent the buyer's utility from being overly reduced. Hence the seller can extract more of the buyer's utility. If the seller is sufficiently risk averse, implementing a fuel surcharge prevents the seller from losing expected profit due to cost uncertainty. Therefore, both the seller and the buyer are willing to make a contract even when each individual's risk averseness is sufficiently high if a fuel surcharges schedule is offered. In addition, when there are multiple buyers, a lower type buyer is more likely to bear the burden of risk due to fuel price uncertainty.In the second essay, we study channel member's strategic price and quality decisions on their products. It has been conventionally known that the introduction of a store brand can be used as a tool for customer segmentation or store profitability. More recent studies investigate the similarity in quality levels between store and national brands, but ignored the retailers' competitive behaviors. This paper investigates how retailers design store brand products under different market characteristics, such as the intensity of competition, consumer heterogeneity, and the manufacturer's strategic decisions. We find that symmetric retailers have an incentive to decrease the product quality of their store brands as the competition among them gets more intense, while a monopolistic retailer positions its store brand product relatively close to the national brand.
Three Essays On Pricing Strategies
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Author : Fan Liu (Ph. D.)
language : en
Publisher:
Release Date : 2017
Three Essays On Pricing Strategies written by Fan Liu (Ph. D.) and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017 with categories.
Pricing is one of the most vital topic within the theory of Microeconomics. A firm can use a variety of pricing strategies to maximize its profit, gain market share, enter a new market or prevent potential entrants. This dissertation contains three essays exploring the equilibrium effect of various pricing strategies. The first chapter, co-authored with David S. Sibley and Wei Zhao, examines the effects of two types of vertical restrictions that are found in the cigarette and soft drink industries. In one case, a manufacturer gives discounts to the retailer in return for a commitment that the manufacturers product be priced no higher than a specified competing product. We refer to this as a vertical MFN (VMFN). The second is an agreement where the retailer commits to price in such a way that its margin on the product is no higher than the equivalent margin on a specified competing product. We refer to this as a vertical margin constraint (VMC). We show that the VMFN results in equilibrium prices that are higher than in a benchmark case without the constraint. In contrast, the VMC constraint leads to uniformly lower prices. The distributional effects are different, too. The VMFN tends to raise manufacturer profits, if different manufacturers produce very similar products. The retailer is worse off. The opposite effects arise in the VMC case. The second chapter analyzes firms giving switching discounts to consumers who purchased from their rivals rather than own past customers. By analyzing a two-period duopoly model with horizontal differentiation, we find that when the intrinsic value of the product is not high enough to make sure that the consumers will buy at least one of the product, the dynamic price path featured in the previous literature involving a raised second period price for customers with relatively high valuation will be reversed. Moreover, offering switching discounts results in a profit lower than the benchmark case, where such a pricing strategy is unavailable. The third chapter discusses how bundled discounts affect firm's decision of extending the product line by versioning the product through horizontal differentiation or vertical quality degrading. We propose a framework showing that inter-firm mixed bundling schemes may incentivize the introduction of a differentiated product, while in the absence of bundling it may not be profitable to do so. However, the consumer's surplus gain as a result of intensified competition and increased variety of goods from versioning will be dominated by the negative welfare impacts of bundling.
Essays In Industrial Organization Intermediation Marketing And Strategic Pricing
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Author : Sebastian Wismer
language : en
Publisher:
Release Date : 2014
Essays In Industrial Organization Intermediation Marketing And Strategic Pricing written by Sebastian Wismer and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014 with categories.
Essays On Pricing Strategy And Market Effects Of New Product Introduction
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Author : Ying Lin
language : en
Publisher:
Release Date : 2019
Essays On Pricing Strategy And Market Effects Of New Product Introduction written by Ying Lin and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with categories.
This dissertation consists of two essays that analyze economic issues that fall within the sub-field of economics known as Industrial Organization. The essays focus on commercial aviation and coffee industries, respectively. The two essays maintain tight connections between economic theory and empirical analysis, and examine the observed economic phenomena in their respective markets in the past few years using econometric methods that are popular in Industrial Organization. The first essay investigates the U.S. domestic airlines' pricing strategies in response to the significant worldwide decline in crude oil price beginning in mid-2014 through to 2015. Specifically, this essay examines the market mechanisms through which crude oil price may influence airfare, which facilitates identifying the possible market and airline-specific characteristics that may influence the extent to which crude oil price changes affect airfare. The essay first uses a simple theoretical model of air travel demand and Nash equilibrium price-setting behavior of airlines to derive clear theoretical predictions that guide proper specification of reduced-form regression models and help with interpreting empirical results. The empirical results reveal that there is a positive pass-through from changes in crude oil price to airfare, but the magnitude of the pass-through depends on several origin-destination market and airline-specific characteristics. In particular, the magnitude of the pass-through tends to be greater in more competitive origin-destination markets, smaller in longer distance markets, and smaller among airlines that purchase fuel using hedging contracts. The second essay analyzes the market effects of the introduction of single-cup coffee brew technology on the U.S. brew-at-home coffee market, particularly on the traditional auto-drip brew coffee segment. The introduction of single-cup coffee brew technology in the late 2000s has not only changed the way many brew-at-home coffee drinkers brew and consume coffee in daily life, i.e. a change from brewing one "pot" at a time to making one cup at a time, but also altered the overall landscape of the brew-at-home coffee market in the U.S. This paper analyses the economic impacts in the U.S. brew-at-home coffee market associated with the introduction and growing presence of single-cup coffee brew technology. We find that a typical coffee drinker is willing to pay up to 2.52 cents extra per fluid ounce to consume freshly brewed coffee from single-cup brewing machines instead of using the traditional auto-drip brewing method, and this marginal willingness to pay gap increases with consumers' income level. Second, we find that both the demand and profitability of traditional auto-drip brew coffee products are substantially lower owing to the growing consumer valuation of single-cup brew technology. Last, our analysis reveals that consumers enjoy substantially higher welfare owing to the introduction and growing popularity of single-cup brew coffee products.
Essays On Pricing In Strategic Settings
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Author : Daniel Quint
language : en
Publisher:
Release Date : 2007
Essays On Pricing In Strategic Settings written by Daniel Quint and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007 with categories.
Essays On Marketing Strategy
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Author : Yeong Seon Kang
language : en
Publisher:
Release Date : 2012
Essays On Marketing Strategy written by Yeong Seon Kang and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012 with categories.
The objective of this dissertation is to understand optimal firm strategies (distribution channel structure, product and pricing strategies) using the Hotelling model in a duopoly competition. In Essay 1, I study how distribution channel structure affects quality decisions in a duopoly competition. I consider a set-up in which two retailers with different distribution channel structures compete on product quality and retail price. Channel decentralization can lead to more quality differentiation, which can soften the price competition. It turns out that two asymmetric strategy equilibria of an integrated and a decentralized channel structure exist. A retailer can adopt the integrated channel structure in which the retailer has the power to determine the quality of its product or can adopt the decentralized channel structure in which the supplier determines the product quality. I find that the asymmetric pairs of a decentralized channel by one retailer and an integrated channel by the other retailer can be a Nash equilibrium in a simultaneous-channel-choice model. In a sequential-channel-choice model, I find that the leader-retailer chooses the integrated channel and the follower-retailer chooses the decentralized channel and the leader can get a first-mover advantage. From a supplier's perspective, who can decide the distribution channel structure and level of quality, symmetric pairs of distribution channel structures are the equilibrium. When the market is covered and the competition between the channels exists, both suppliers choose the decentralized channel in equilibrium. When the market is not covered and each channel plays as a local monopoly, both suppliers choose the integrated channel in equilibrium. When I extend the model by adding two-dimensional consumer heterogeneity, the results are consistent with the basic model under certain conditions of the demand specification. In Essay 2, I analyze a duopoly competition when two firms face input cost increases. The objective of this study is to determine the firms' optimal strategy between a price increase and downsizing under conditions of a spatially differentiated market and consumers' diminishing utility on the product size. I analyze both symmetric and asymmetric cases of firms' original cost conditions. I find that when the two firms have the symmetric cost structures (i.e., the two firms have the same marginal cost), both firms choose the symmetric strategy in equilibrium and it depends on the amount of the cost increase. When the cost increase is sufficiently large, the two firms choose downsizing is a unique Nash equilibrium. When the input cost increase is sufficiently small, a price increase is a dominant strategy because both firms can pass the entire amount of the cost increase to the end consumers via the price increase and they can maintain their profits. When the input cost increase is intermediate, there are two Nash equilibria: (a) both firms choose a price increase or (b) both firms choose downsizing. I find that when the two firms have the asymmetric cost structures, the two firms might choose asymmetric pairs of strategies in equilibrium under certain conditions. The equilibrium outcomes depend on the cost differences between two firms and the amount of the cost increase. When the cost differences between the two firms are sufficiently small and the cost increase is sufficiently small, a price increase is the dominant strategy for both firms. When the cost differences between the two firms are sufficiently large and the cost increase is sufficiently small, the cost leader chooses a price increase, and the cost-disadvantaged firm chooses downsizing in equilibrium. When the cost increase is sufficiently large, both firms are reducing the product size in equilibrium. I extend model including an interaction effect between a consumer's loyalty and diminishing utility on the product size. Unexpectedly, downsizing might not be more favorable when a consumer's loyalty is weighted on the consumer's utility from the product size.
Two Essays On The Implications Of Demand State Dependence On Pricing Decisions
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Author : Polykarpos Pavlidis
language : en
Publisher:
Release Date : 2011
Two Essays On The Implications Of Demand State Dependence On Pricing Decisions written by Polykarpos Pavlidis and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011 with Consumer behavior categories.
"Marketing strategies that firms adopt are based on consumers' response in the marketplace when they face and interact with these strategies. This dissertation examines the tendency of consumers to repeat their last purchase choices and the implications of this type of behavior on pricing related strategies of consumer packaged goods brand manufacturers. The first essay is a theory based empirical investigation about the commonly observed practice of brands offering temporary price promotions. There have been many theories that attempt to explain the popularity of price promotions as a marketing tool but with very few exceptions they are disconnected from choice dynamics. We examine the empirical support of a recent theory that connects price promotions with demand state dependence. In our investigation we measure how much each brand benefits from the consumers' tendency to repeat purchase and we examine the connection between this measure (AMEL) and the brands' price promotional frequencies. Our extensive sample includes all major brands from twenty product categories of frequently purchased goods and twenty stores in two separate geographical markets. Our empirical model accounts explicitly for the dependence of price promotions on demand response and vice versa. In summary, we find significant and robust evidence that brands which gainmore from consumers' repeat purchase behavior are offered on promotion formore weeks on average. We also demonstrate the value of our proposed estimation algorithm over simpler, two-step, approaches. In the second essay we examine consumers' state dependence not only to specific choice alternatives but also to parent brands that cover multiple sub-brands. Using a structural, forward looking, pricing model for multiproduct firms, we explore the implications of parent brand state dependence on equilibrium prices and firm profitability through counterfactual experiments. Empirically, we examine household level choice data from the category of yogurt and estimate state dependence to both the parent brand and the sub-brand level. We find evidence of parent brand state dependence for the category of yogurt. Its impact on the market equilibrium is to push prices downwards, because firms invest in future demand, and increase profitability of multiproduct firms, because per period demand increases"--Leaves iv-v.
Essays In Nonlinear Pricing
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Author : Garrett Patrick Hagemann
language : en
Publisher:
Release Date : 2018
Essays In Nonlinear Pricing written by Garrett Patrick Hagemann and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018 with categories.
This dissertation addresses several open issues in the economics surrounding the use of nonlinear pricing. The first chapter empirically examines the impact of the use of nonlinear pricing by wholesalers. The second chapter evaluates how firm profit depends on the number of prices offered in a nonlinear price schedule. Finally, the third chapter investigates the use of all-unit discounts as a price discrimination instrument. The first chapter exploits a unique data set of price schedules to provide the first empirical estimate of the welfare impact of second degree price discrimination in a market with double marginalization. Theoretical predictions in such a context are ambiguous. Quantity discounts at the wholesale level reduce costs for larger retailers, increasing efficiency. However, quantity discounts raise input costs for smaller retailers, increasing prices consumers may pay. The combined welfare effects on consumers umers depends on how much of input cost discounts are passed through to consumers and the distribution of retailer size. I develop and estimate a model of the New York State retail liquor market where wholesalers offer a multi-part nonlinear tariff for each product. The structural model is then used to estimate the welfare impact of restricting wholesale pricing to be linear. I find that banning quantity discounts reduces total welfare by approximately 14% on average. Consumer surplus and wholesaler profit decline by approximately 26% on average. Average retailer profit increases by a similar magnitude, though effects for a particular retailer are heterogeneous across retailer size. The second chapter examines the shape of observed price schedules more directly. Sellers often offer price schedules with relatively few segments rather than completely nonlinear price schedules which offer a unique price for each unit sold. By not offering a completely nonlinear, sellers are foregoing some additional profit in favor of a simpler pricing strategy. I find that the scale of these foregone profits is relatively small and only loosely related to product characteristics. When considered in percentage terms, foregone profits are very similar across a large number of products. This suggests that simple pricing strategies obtain almost all the profits available and this is a common property of nonlinear pricing strategies. The final chapter compares price discrimination through two different quantity discount mechanisms: all-unit discounts and incremental discounts. All-unit-discounts give consumers a lower marginal price on all units purchased once total purchase size crosses a threshold. Incremental discounts only provide discounts on units above the threshold. Relative to incremental discounts, all-unit-discounts imply higher marginal prices and bunching of purchase sizes in equilibrium. The equilibrium bunching may present a challenge for estimating the model empirically.