Theory and evidence on pricing by asymmetric oligopolies

We present an analysis of markets with many asymmetrically positioned retailers that compete for the business of both informed and uninformed customers for a homogenous good, such as software, music, book or a brand-name appliance. We show that two forms of asymmetry, one related to loyal segment si...

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Bibliographic Details
Published inInternational journal of industrial organization Vol. 24; no. 1; pp. 83 - 105
Main Authors Kocas, Cenk, Kiyak, Tunga
Format Journal Article
LanguageEnglish
Published Elsevier B.V 2006
Elsevier
SeriesInternational Journal of Industrial Organization
Subjects
Business economics
Economic models
Electronic commerce
Imperfect competition
Internet
Internet economics
Market theory
Mathematical methods
Oligopoly
Price comparison shopping
Price competition
Pricing
Retail trade
Price competition
D43
L11
Price comparison shopping
Internet economics
L13
Oligopoly
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Summary:We present an analysis of markets with many asymmetrically positioned retailers that compete for the business of both informed and uninformed customers for a homogenous good, such as software, music, book or a brand-name appliance. We show that two forms of asymmetry, one related to loyal segment sizes of retailers and one related to the positioning of firms, completely explain the observed price dispersion in such markets and the multitude of asymmetrical strategies adopted by retailers. The stochastic dominance of empirical mixed strategy measures is used to test the theory with data on 968 books from 10 online retailers.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0167-7187
DOI:10.1016/j.ijindorg.2005.02.003