Price competition for an informed buyer
type: Item
instance of: scholarly article
title: Price competition for an informed buyer
zbMATH Open document ID: 1010.91031
author: Giuseppe Moscarini
author: Marco Ottaviani
published in: Journal of Economic Theory
publication date: 2001-01-01T00:00:00Z
review text: In this pretty long and mathematically rigorous paper the authors study a price competition problem involving two sellers offering different quality goods to a buyer who has a private information on their relative quality. The sellers appear to act as local monopolists when a prior belief toward goods is balanced and the information is precise. However, when the prior belief is very biased toward one good, and the buyer's information is not precise, the sellers' behaviours may be modeled by the Bertrand model. The seller's equilibrium profits may decline with the release of public information. It is proved that a dominant seller loses from a higher ex-aute reputation. Finally, the buyer prefers not to be known as one being well informed about the relative quality of the goods.
Mathematics Subject Classification ID: 91B24
Mathematics Subject Classification ID: 91A10
zbMATH DE Number: 1736553
zbMATH Keywords: price competition
zbMATH Keywords: Bertrand model
zbMATH Keywords: private information
reviewed by: Leszek S. Zaremba
MaRDI profile type: Publication
OpenAlex ID: W2095259896
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DOI: 10.1006/JETH.2000.2779
description: scientific article; zbMATH DE number 1736553