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dc.contributor.authorMatzke, Christinaen_US
dc.contributor.authorWirth, Benedikten_US
dc.date.accessioned2009-06-30en_US
dc.date.accessioned2010-07-29T10:08:09Z-
dc.date.available2010-07-29T10:08:09Z-
dc.date.issued2009en_US
dc.identifier.urihttp://hdl.handle.net/10419/37019-
dc.description.abstractWe analyze the strategic behavior of firms when demand is determined by a rule of thumb behavior of consumers. We assume consumer dynamics where individual consumers follow simple behavioral decision rules governed by imitation and habit as suggested in consumer research. On this basis, we investigate monopoly and competition between firms, described via an open loop differential game which in this setting is equivalent to but analytically more convenient than a closed-loop system. We derive a Nash equilibrium and examine the influence of advertising. We show for the monopoly case that a reduction of the space of all price paths in time to the space of time-constant prices is sensible since the latter in general contains Nash equilibria. We prove that the equilibrium price of the weakest active firm tends to marginal cost as the number of (non-identical) firms grows. Our model is consistent with observed market behavior such as product life cycles.en_US
dc.language.isoengen_US
dc.publisherGraduate School of Economics Bonnen_US
dc.relation.ispartofseriesBonn econ discussion papers 2009,3en_US
dc.subject.jelC61en_US
dc.subject.jelC62en_US
dc.subject.jelC79en_US
dc.subject.jelL11en_US
dc.subject.jelL21en_US
dc.subject.jelM31en_US
dc.subject.jelM37en_US
dc.subject.ddc330en_US
dc.subject.keywordBounded rationalityen_US
dc.subject.keywordsocial learningen_US
dc.subject.keywordpopulation gameen_US
dc.subject.keyworddifferential gameen_US
dc.subject.keywordproduct life cycleen_US
dc.subject.keywordmonopolyen_US
dc.subject.keywordcompetitionen_US
dc.subject.keywordpricingen_US
dc.subject.keywordadvertisingen_US
dc.subject.stwPreistheorieen_US
dc.subject.stwMarktstrukturen_US
dc.subject.stwWettbewerben_US
dc.subject.stwBetriebliche Preispolitiken_US
dc.subject.stwWerbungen_US
dc.subject.stwSpieltheorieen_US
dc.subject.stwProduktlebenszyklusen_US
dc.subject.stwKonsumtheorieen_US
dc.subject.stwBeschränkte Rationalitäten_US
dc.subject.stwLernprozessen_US
dc.subject.stwTheorieen_US
dc.titleProduct pricing when demand follows a rule of thumben_US
dc.typeWorking Paperen_US
dc.identifier.ppn603371086en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-
Appears in Collections:Bonn Econ Discussion Papers, Bonn Graduate School of Economics (BGSE), Universität Bonn

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