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 and learn it in response to consumerfs behavior. As a result of informational externalities, new entry occurs gradually. This dual uncertainty contributes to S-shaped diffusion of the new product with strictly declining prices.

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Year of publication:	2009-05
Authors:	Kitamura, Hiroshi
Institutions:	Graduate School of Economics, Osaka University
Subject:	experience goods \| quality uncertainty \| bilateral learning \| S-shaped diffusion

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Series:	Discussion Papers in Economics and Business.
Type of publication:	Book / Working Paper
Notes:	Number 09-13 25 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/10005052150