Market Diffusion with Consumer-Based Bilateral Learning

This paper analyzes the market diffusion of a new product whose quality is uncertain. Consumers learn the product quality by observing the history of market outcomes. Firms cannot observe how consumers evaluate the product quality; instead, they learn by observing consumer behavior. New entry occurs gradually because of informational externalities. This dual uncertainty contributes to an S-shaped diffusion of the new product with declining prices.

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Year of publication:	2009-05
Authors:	Kitamura, Hiroshi ; Miyaoka, Akira
Institutions:	Graduate School of Economics, Osaka University
Subject:	Experience Goods \| Quality Uncertainty \| Bilateral Learning \| S-shaped Diffusion

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Extent:	application/pdf
Series:	Discussion Papers in Economics and Business.
Type of publication:	Book / Working Paper
Language:	English
Notes:	Number 09-13-Rev 28 pages
Classification:	D11 - Consumer Economics: Theory ; L11 - Production, Pricing, and Market Structure Size; Size Distribution of Firms ; L14 - Transactional Relationships; Contracts and Reputation; Networks
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10009293820