Experimentation and competition
type: Item
instance of: scholarly article
title: Experimentation and competition
zbMATH Open document ID: 0895.90027
author: Arthur Fishman
author: Rafael Rob
published in: Journal of Economic Theory
publication date: 1998-04-01T00:00:00Z
review text: This paper examines the effect of competition on firms' efforts to experiment and learn about market demand. Consumers are assumed to know prices only at sellers they have actually visited, but must bear search costs to find the prices of other sellers. Under these condition we show that firms' incentives to experiment are diluted by comparison with the monopoly case and that this effect is stronger the smaller the search cost. The learning environment we portray gives rise to several time paths which have been empirically documented, including penetration pricing, cream-skimming, and cyclical pricing.
Mathematics Subject Classification ID: 91B38
Mathematics Subject Classification ID: 91B62
Mathematics Subject Classification ID: 91B42
zbMATH DE Number: 1136578
MaRDI profile type: Publication
full work available at URL: jeth.1997.2365
OpenAlex ID: W2082316349
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DOI: 10.1006/JETH.1997.2365
description: scientific article; zbMATH DE number 1136578