The price of competitiveness in competitive pricing

Article Abstract:

The study examines how pricing decisions might be improved. We test the hypothesis that managers have a tendency to overcompete by comparing the performance of managers with the performance of computerized strategies in a Prisoner's Dilemma pricing experiment. We find that the subjects in our study obtain lower profits than matched computer strategies. The subjects appear to value relative performance against competitors, even when they are explicitly instructed to maximize profits and are compensated based on profits. The implication for managers is that pricing to maximize profits may require tolerating the strong performance of competitors, even to the point of accepting a lower profit than some or all the competitors. If competitiveness means an adversarial, "zero-sum game" view of one's competitors, then the price of competitiveness in competitive markets such as those in our experiment may be lower profits. Being less competitive may be more profitable. (Reprinted by permission of the publisher.)

Pricing, Prisoner's dilemma game

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Reciprocal threats in multimarket rivalry: staking out 'spheres of influence' in the U.S. airline industry

Article Abstract:

The competitive motivation of companies that simultaneously compete against one another in more than one market was examined. The study tested the hypotheses that the intensity of the competitive behavior of a challenger and the market share held by a leader will be affected by the presence of reciprocal multimarket contacts with the focal-market leader. The results show that the intensity of competition lessens and market shares improve when firms that have important interests in a focal market can get back at their focal-market rivals in markets where the latter have important interests. This results in the implicit segmentation of the markets into spheres of influence. Multipoint competition in the airline industry is examined.

Scheduled Airlines, Scheduled Air Transportation, Air Transportation, Scheduled, And Air Courier Services, Airlines, Market share, Spheres of influence

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A call for papers: cost management concepts, firm performance, and industrial competitiveness

Article Abstract:

A proposal to write an issue of the Journal of Accounting and Public Policy on the cost management concepts and industrial competitiveness was made, in the light of its importance in world economic policy formulation. The topics of discussion for the said issue would include cost management techniques, management accounting systems, and firm performance and competitive strategies. Contributions from interested parties for the mentioned topics were encouraged.

Management-Productivity, Cost Control Techniques, Cost Accounting, Editorial, Organizational effectiveness, Managerial accounting, Cost control

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