IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v62y2016i1p216-224.html
   My bibliography  Save this article

Customer Recognition in Experience vs. Inspection Good Markets

Author

Listed:
  • Bing Jing

    () (Cheong Kong Graduate School of Business, Beijing 100738, People’s Republic of China)

Abstract

We study the effects of customer recognition and behavior-based price discrimination (BPD) in a two-period experience good duopoly with a discrete value distribution, and we investigate the role of consumers’ ex ante valuation uncertainty in dynamic price competition through comparison with an inspection good duopoly. Several results are reached. First, the firms may reward repeat purchase when the probability of a high value is relatively low and when the high–low value difference is large; otherwise, they may engage in poaching. Second, BPD frequently increases each firm’s total profits, even in the poaching equilibrium. These results contrast with the inspection good duopoly, and the driver is that consumers’ period 2 product preference depends on their realized values in period 1. Third, consumers’ ex ante valuation uncertainty may increase or decrease firm profits without BPD, and it weakly increases firm profits with BPD, relative to the inspection good duopoly. This paper was accepted by J. Miguel Villas-Boas, marketing .

Suggested Citation

  • Bing Jing, 2016. "Customer Recognition in Experience vs. Inspection Good Markets," Management Science, INFORMS, vol. 62(1), pages 216-224, January.
  • Handle: RePEc:inm:ormnsc:v:62:y:2016:i:1:p:216-224
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mnsc.2014.2114
    Download Restriction: no

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:62:y:2016:i:1:p:216-224. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc). General contact details of provider: http://edirc.repec.org/data/inforea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.