Habit persistence, heterogeneous tastes, and imperfect competition

Article Abstract:

A study was conducted to examine noncompetitive pricing in the presence of habit effects and a combination of heterogeneous consumers. In particular, this study is concerned about the dynamic behavior of consumption and price in conditions where imperfectly competitive producers deal with different intensities of rational habit persistence. Under competition commitment as well as monopoly commitment, the steady-state level and transient path of consumption are not disturbed by the relative mix of consumer types. In the consistent case, the persistence rate and steady-state consumption drops when the proportion of habital consumers rises.

Consumer preferences, Habit, Habits (Human behavior)

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Why market shares matter: an information-based theory

Article Abstract:

Consumers tend to decide on which items to purchase on the information they gather on the quantity of individuals buying such items. Managers are also particularly concerned about quantities sold or market shares. A product's high market share may signify that it is of high quality. A duopoly model is used to present an information-based theory of the value of market shares from the viewpoint of consumers and firms. Consumers consider past market shares to examine relative quality differences. Firms compete for market shares to manipulate consumers' learning.

Economic aspects, Market share, Duopolies

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Buying frenzies and seller-induced excess demand

Article Abstract:

A study was conducted on seller-induced excess demand and the 'buying frenzy' behavior. Monopolists prefer to sell to uninformed customers because they have more predictable valuation for a good than informed customers. Selling lesser units compared to demand induces customers to buy while uninformed since buyers waiting to purchase until informed will eventually be unable to find available units. Such a 'buying frenzy' behavior enables monopolists to peg prices beyond the informed market-clearing price.

Supply and demand

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