Competitive Strategies when Consumers are Relative Thinkers: Implications for Pricing, Promotions, and Product Choice

How should firms optimally choose prices and promotional strategies and how should they position their products when consumers are "relative thinkers"? We provide answers in a model that extends the seminal contributions of Varian (1980) and Narasimhan (1988) and derive both managerial implications and implications for empirical researchers with regards to promotional frequency and depth as well as observed product heterogeneity in the market.

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Year of publication:	2020
Authors:	Inderst, Roman ; Obradovits, Martin
Publisher:	Innsbruck : University of Innsbruck, Research Platform Empirical and Experimental Economics (eeecon)
Subject:	Relative Thinking \| Price Competition \| Promotions \| Product Choice \| Product Heterogeneity \| Managerial Implications

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Series:	Working Papers in Economics and Statistics ; 2020-25
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	1724294032 [GVK] hdl:10419/238249 [Handle] RePEc:inn:wpaper:2020-25 [RePEc]
Classification:	D21 - Firm Behavior ; D43 - Oligopoly and Other Forms of Market Imperfection ; D91 - Intertemporal Consumer Choice; Life Cycle Models and Saving ; L11 - Production, Pricing, and Market Structure Size; Size Distribution of Firms ; L13 - Oligopoly and Other Imperfect Markets
Source:	EconStor

Persistent link: https://www.econbiz.de/10012609034