Firm competition in a probabilistic framework of consumer choice

We develop a probabilistic consumer choice framework based on information asymmetry between consumers and firms. This framework makes it possible to study market competition of several firms by both quality and price of their products. We find Nash market equilibria and other optimal strategies in various situations ranging from competition of two identical firms to firms of different sizes and firms which improve their efficiency.

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Year of publication:	2014
Authors:	Liao, Hao ; Xiao, Rui ; Chen, Duanbing ; Medo, Matúš ; Zhang, Yi-Cheng
Published in:	Physica A: Statistical Mechanics and its Applications. - Elsevier, ISSN 0378-4371. - Vol. 400.2014, C, p. 47-56
Publisher:	Elsevier
Subject:	Market competition \| Consumer choice \| Information asymmetry \| Game theory

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Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10011061881