Buyers' decision and price competition
AbstractThis paper describes a price game in which buyersâ€™ decisions about how much and where to buy are based on different information and/or preferences. Such consumersâ€™ behavior is likely when demand comes from public agencies and state-owned firms. Consumers in this case are said to be uninformed. The model analyzes the price Nash equilibrium reached for any possible proportion of uninformed demand. In equilibrium there is always a positive probability that uninformed consumers pay a price above the monopoly level. For large proportions of uninformed consumers all firms charge a price above the monopoly level. The model also points out that the intense competition associated with Bertrand-like settings depends largely on the assumptions about consumersâ€™ behavior.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Rome La Sapienza, Department of Public Economics in its series Working Papers with number 36.
Date of creation: Jan 1999
Date of revision:
price competition; imperfect information; Bertrand.;
Find related papers by JEL classification:
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
You can help add them by filling out this form.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Luisa Giuriato).
If references are entirely missing, you can add them using this form.