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Pricing leadership decisions of competing firms with consumer learning

Author

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  • Rui Hou
  • Zibin Cui
  • You Zhao

Abstract

We consider two competing firms that sell two quality‐differentiated products over two periods, in which the high‐ or low‐quality firms have the option to act as a pricing leader or follower in the first or second periods. Two groups of consumers make their purchase decisions in the first or second periods, with the former consumers using the experience available to the latter from online communities (e.g., TikTok). Our analysis indicates that competition intensity and consumers' reviews are two interacting forces that steer the equilibrium decisions of the two competing firms.

Suggested Citation

  • Rui Hou & Zibin Cui & You Zhao, 2022. "Pricing leadership decisions of competing firms with consumer learning," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 2326-2346, September.
    • Handle: RePEc:wly:mgtdec:v:43:y:2022:i:6:p:2326-2346
    DOI: 10.1002/mde.3528
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    3. Li, Feng & Du, Timon C. & Wei, Ying, 2023. "This is what’s in store for you: How online social learning affects product positioning," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 179(C).

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