Bertrand-Edgeworth competition has recently been analyzed under imperfect buyer mobility, as a game in which, once prices are chosen, a static buyer subgame (BS) is played where the buyers choose which seller to visit (see, e.g., Burdett et al, 2001). Our paper considers a symmetric duopoly where two buyers play a two-stage BS of imperfect information after price setting. With prices su¢ ciently close, an equilibrium of the BS is characterized in which the buyers keep loyal if previously served. Conditional loyalty is proved to increase the Örmsímarket power: at the corresponding subgame perfect equilibrium of the entire game, the price is higher than that corresponding to the equilibrium of the BS in which the buyers are persistently randomizing.
De Francesco, M.A. (2018). Conditional loyalty and its implications for pricing.
|Titolo:||Conditional loyalty and its implications for pricing|
|Citazione:||De Francesco, M.A. (2018). Conditional loyalty and its implications for pricing.|
|Appare nelle tipologie:||5.13 Altro|
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|Conditional loyalty and its implications for pricing.pdf||paper sottoposto a rivista e depositato nel Munich Peronal RePec Archive||PDF editoriale||PUBBLICO - Pubblico senza Copyright||Open Access Visualizza/Apri|