Title Information spillovers in experience goods competition [electronic resource] / Zhuoqiong Charlie Chen, Christopher T. Stanton, Catherine Thomas.
Imprint Cambridge, Massachusetts : National Bureau of Economic Research, 2021.©2021
Author Chen, Zhuoqiong. author.
National Bureau of Economic Research. issuing body.
Date 01-01-2021
Physical description 1 online resource.
text
online resource
Series NBER working paper series ; no. w28584
Working paper series (National Bureau of Economic Research) ; no. w28584.
Item WEB (Copy 1) INTERNET 1319433-1001 ONLINE
URL Full text available from the National Bureau of Economic Research: http://dx.doi.org/10.3386/w28584
Major subject Prices and charges
Goods (Economics)
Competition
Minor subject Overseas item
Notes "March 2021"
Includes bibliographical references.
Abstract When experience goods compete, consuming one product can be informative about value for similar untried products. We study a two-period model of duopoly competition in markets that have this feature and where firms can price discriminate between consumers based on purchasing history. Price dynamics, firm profits, and consumer surplus depend on how information spillovers shape demand from the consumers who have trialed the rival product - the potential switchers. In the first period, rather than competing intensely for all future profits, firms compete only for the difference in future profits between repeat and switching consumers. Demand-side information spillovers offer an explanation of how competing firms in new product markets can be profitable in all periods even when selling products that are indistinguishable ex ante.
LCN 1319433
Item ID 1319433-1001
Database Library Catalogue