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Price competition in mixed strategies in markets with habit formationPrice competition in mixed strategies in markets with habit formation

Author

Listed:
  • Alejandro Tatsuo Moreno Okuno

    () (Universidad de Guanajuato)

Abstract

En este articulo analizo la competencia entre firmas cuando las caracteristicas favoritas de los individuos son las caracteristicas de los productos que han consumido en el pasado. Modelo un juego de dos periodos en el cual dos firmas compiten en un mercado de productos diferenciados, donde las caracteristicas favoritas de los individuos en el segundo periodo son las caracteristicas de los productos que consumieron en el primer periodo. En este caso, las firmas pueden manipular la distribucion de preferencias. Si las firmas diferencian sus productos, separaran las preferencias, creando el equivalente a un costo de cambiar a otro producto. Sin embargo, si las firmas producen productos similares, reduciran el costo de todos los individuos de consumir el producto de la otra firma, incrementando la competencia. Resuelvo por el Equilibrio Perfecto de Nash en Subjuegos del modelo y encuentro que las firmas escogen diferenciarse lo mas posible al colocar sus productos a los extremos del espacio de caracteristicas.

Suggested Citation

  • Alejandro Tatsuo Moreno Okuno, 2010. "Price competition in mixed strategies in markets with habit formationPrice competition in mixed strategies in markets with habit formation," EconoQuantum, Revista de Economia y Negocios, Universidad de Guadalajara, Centro Universitario de Ciencias Economico Administrativas, Departamento de Metodos Cuantitativos y Maestria en Economia., vol. 7(1), pages 69-95, Julio - D.
  • Handle: RePEc:qua:journl:v:7:y:2010:i:1:p:69-95
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    File URL: http://econoquantum.cucea.udg.mx/Volumen_7_Num_1/art.3vol.7num.1.pdf
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    File URL: http://econoquantum.cucea.udg.mx/?page_id=749
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    References listed on IDEAS

    as
    1. George Loewenstein & Ted O'Donoghue & Matthew Rabin, 2003. "Projection Bias in Predicting Future Utility," The Quarterly Journal of Economics, Oxford University Press, vol. 118(4), pages 1209-1248.
    2. Alejandro Tatsuo Moreno-Okuno, 2012. "Habit formation and oligopolistic competition," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 27(2), pages 379-400.
    3. Pollak, Robert A, 1970. "Habit Formation and Dynamic Demand Functions," Journal of Political Economy, University of Chicago Press, vol. 78(4), pages 745-763, Part I Ju.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    habit-formation; oligopolistic competition; product differentiation; Hotelling's location model.;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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