Social Learning and Delay in a Dynamic Model of Price Competition

Aoyagi, Masaki; Bhalla, Manaswini; Gunay, Hikmet

Social Learning and Delay in a Dynamic Model of Price Competition

Aoyagi, Masaki; Bhalla, Manaswini; Gunay, Hikmet

Institute of Social and Economic Research Discussion Papers, 2014, 909, 1-43

Number of Access:521（2025-11-04 06:26 Counts）

Identifier to cite or link to this item: https://hdl.handle.net/11094/48411

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Title	Social Learning and Delay in a Dynamic Model of Price Competition
Creator	NRID 1000050314430 1000050314430 ORCID 0000-0003-0647-3733 0000-0003-0647-3733 researchmap permalink Masaki_Aoyagi Masaki_Aoyagi Scopus Author ID 7201467696 7201467696 CreatorName Aoyagi, Masaki
	CreatorName Bhalla, Manaswini
	CreatorName Gunay, Hikmet
Subject	dynami pricing
	delay
	social learning
	duopoly
	product differentiation
	durable good
	preemption
	revenue management
Abstract	This paper studies dynamic price competition over two periods between two firms selling differentiated durable goods to two buyers who are privately informed about their types, but have valuations of the two goods dependent on the other buyer's type. The firms' pricing strategy in period 1 must take into account the buyers' incentive to wait and learn from the other buyer's decision. We construct an equilibrium based on the key observation that the expected price of either good in period 2 is the same as its price in period 1 on and off the path of play. The equilibrium is shown to be non-preemptive in the sense that even if either firm fails to make a sale in period 1, it still makes a sale with positive probability in period 2. A characterization of the equilibrium is given in terms of the probability of delay as a function of the degree of interdependence between the two buyers.
Publisher	The Institute of Social and Economic Research, Osaka University
Source Title	Institute of Social and Economic Research Discussion Papers
Volume (Issue)	909
Page	1-43
Date of Issued	2014-07
Language	English
Handle URL	https://hdl.handle.net/11094/48411
Relation.references	URI https://www.iser.osaka-u.ac.jp/static/resources/docs/dp/2014/DP0909.pdf
Access Rights	metadata only access
Category	ディスカッション／ワーキング・ペーパー DP/WP
Category	Institute of Social and Economic Research Discussion Papers

Resource Type	technical report
Local Type	DP/WP
DCMI Type	Text
DCTERMS.bibliographicCitation	Institute of Social and Economic Research Discussion Papers. 2014, 909, p. 1-43
DC.title	Social Learning and Delay in a Dynamic Model of Price Competition
DC.creator	Aoyagi, Masaki
	Bhalla, Manaswini
	Gunay, Hikmet
DC.publisher	The Institute of Social and Economic Research, Osaka University
DC.language' scheme='DCTERMS.RFC1766	English
DC.type' scheme='DCTERMS.DCMIType	Text
DCTERMS.issued' scheme='DCTERMS.W3CDTF	2014-07
DC.relation' scheme='DCTERMS.URI	https://www.iser.osaka-u.ac.jp/static/resources/docs/dp/2014/DP0909.pdf
DC.subject	dynami pricing
	delay
	social learning
	duopoly
	product differentiation
	durable good
	preemption
	revenue management
DCTERMS.abstract	This paper studies dynamic price competition over two periods between two firms selling differentiated durable goods to two buyers who are privately informed about their types, but have valuations of the two goods dependent on the other buyer's type. The firms' pricing strategy in period 1 must take into account the buyers' incentive to wait and learn from the other buyer's decision. We construct an equilibrium based on the key observation that the expected price of either good in period 2 is the same as its price in period 1 on and off the path of play. The equilibrium is shown to be non-preemptive in the sense that even if either firm fails to make a sale in period 1, it still makes a sale with positive probability in period 2. A characterization of the equilibrium is given in terms of the probability of delay as a function of the degree of interdependence between the two buyers.
DC.format	48411
citation_title	Social Learning and Delay in a Dynamic Model of Price Competition
citation_author	Aoyagi, Masaki
	Bhalla, Manaswini
	Gunay, Hikmet
citation_publisher	The Institute of Social and Economic Research, Osaka University
citation_language	English
citation_date	2014-07
citation_journal_title	Institute of Social and Economic Research Discussion Papers
citation_volume	909
citation_firstpage	1
citation_lastpage	43
citation_public_url	https://hdl.handle.net/11094/48411
citation_abstract_html_url	https://www.iser.osaka-u.ac.jp/static/resources/docs/dp/2014/DP0909.pdf

Social Learning and Delay in a Dynamic Model of Price Competition

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