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Social Attributes and Strategic Equilibrium: A Restaurant Pricing Game

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  • Karni, Edi
  • Levin, Dan

Abstract

Using a game-theoretic approach, the authors examine possible equilibrium explanations of the often-observed phenomenon that two neighboring restaurants offering similar menus nevertheless experience vastly different demands. The essential aspect of this analysis is the presence of a consumption externality that makes the popularity itself a factor in the determination of the relative attractiveness of the restaurants. Copyright 1994 by University of Chicago Press.

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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 102 (1994)
Issue (Month): 4 (August)
Pages: 822-40

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Handle: RePEc:ucp:jpolec:v:102:y:1994:i:4:p:822-40

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Cited by:
  1. Navarro, Noemí, 2012. "Price and quality decisions under network effects," Journal of Mathematical Economics, Elsevier, vol. 48(5), pages 263-270.
  2. Ivan Pastine & Tuvana Pastine, 2000. "Coordination in Markets with Consumption Externalities : The Role of Advertising and Product Quality," Departmental Working Papers 0003, Bilkent University, Department of Economics.
  3. Ilya Segal, 1998. "Contracting with Externalities," Public Economics 9802002, EconWPA.
  4. J. Atsu Amegashie, 2000. "Misery loves company: social influence and the supply/pricing decision of a popular restaurant," Discussion Papers dp00-18, Department of Economics, Simon Fraser University, revised 14 Sep 2000.
  5. Amegashie, J.A., 2002. "Misery Loves Company: Social Influence and the Supply/Pricing Decision of Popular Night Clubs," Working Papers 2002-10, University of Guelph, Department of Economics.
  6. Oz Shy, 2010. "A short survey of network economics," Working Papers 10-3, Federal Reserve Bank of Boston.
  7. Corneo, Giacomo & Jeanne, Olivier, 1997. "Conspicuous consumption, snobbism and conformism," Journal of Public Economics, Elsevier, vol. 66(1), pages 55-71, October.
  8. Micha Gisser & James E. McClure & Giray Ökten & Gary Santoni, 2008. "Some Anomalies Arising from Bandwagons that Impart Upward-Sloping Segments to Market Demand," Working Papers 200804, Ball State University, Department of Economics, revised Dec 2008.
  9. Corneo, Giacomo & Jeanne, Olivier, 1999. "Segmented communication and fashionable behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 39(4), pages 371-385, July.
  10. Giacomo Corneo & Olivier Jeanne, 1994. "Conspicuous Consumption and the Existence of Upward Sloping Demand Curves," Discussion Paper Serie A 461, University of Bonn, Germany.
  11. M Ali Khan & Kali P Rath & Yeneng Sun, 1994. "On the Existence of Pure Strategy Equilibria in Games with a Continuum of Players," Economics Working Paper Archive 381, The Johns Hopkins University,Department of Economics, revised Feb 1997.
  12. Volker Nocke & Martin Peitz, 2004. "Monopoly Pricing under Demand Uncertainty: Final Sales versus Introductory Offers," PIER Working Paper Archive 04-027, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  13. Nick Vikander, 2011. "Capacity Constraints and Beliefs about Demand," Tinbergen Institute Discussion Papers 11-015/1, Tinbergen Institute.
  14. Giacomo Corneo & Olivier Jeanne, 1994. "A Theory of Fashion Based on Segmented Communication," Discussion Paper Serie A 462, University of Bonn, Germany.
  15. Ball, Sheryl & Eckel, Catherine C., 1998. "The Economic Value of Status," The Journal of Socio-Economics, Elsevier, vol. 24(4), pages 495-514.
  16. Roe, Brian E. & Teisl, Mario F., 2004. "Consumption Externalities, Information Policies, And Multiple Equilibria: Evidence For Genetically Engineered Food Markets," 2004 Annual meeting, August 1-4, Denver, CO 20243, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  17. Lorenzo Rocco, 2002. "Anonymity in Nonatomic Games," Working Papers 53, University of Milano-Bicocca, Department of Economics, revised Aug 2002.

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