Dynamic Price Competition, Learning-by-Doing, and Strategic Buyers
- (pp. 1311-33)
Abstract
We examine how strategic buyer behavior affects equilibrium outcomes in a model of dynamic price competition where sellers benefit from learning-by-doing by allowing each buyer to expect to capture a share of future buyer surplus. Many equilibria that exist when buyers consider only their immediate payoffs are eliminated when buyers expect to capture even a modest share of future surplus, and the equilibria that survive are those where long-run market competition is more likely to be preserved. Our results are relevant for antitrust policy and our approach may be useful for future analyses of dynamic competition.Citation
Sweeting, Andrew, Dun Jia, Shen Hui, and Xinlu Yao. 2022. "Dynamic Price Competition, Learning-by-Doing, and Strategic Buyers." American Economic Review, 112 (4): 1311-33. DOI: 10.1257/aer.20202016Additional Materials
JEL Classification
- C73 Stochastic and Dynamic Games; Evolutionary Games; Repeated Games
- D21 Firm Behavior: Theory
- D43 Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- K21 Antitrust Law
- L13 Oligopoly and Other Imperfect Markets
- L40 Antitrust Issues and Policies: General