Advance selling of new products considering retailers’ learning

Chenhang Zeng

International Journal of Economic Theory, 2020, vol. 16, issue 3, 306-328

Abstract: When a retailer launches a new product, the lack of information on market size and consumer valuation lead to yield uncertainty for the retailer concerning demand and therefore lead to risks in production. Under advance selling, the pre‐orders may signal the future demand for the retailer, which helps to reduce demand uncertainty. This paper studies the retailer's optimal advance selling price and production quantity in a two‐period model where the demand uncertainty comes from both the market size and the distribution of consumer valuations. We characterize the conditions under which the retailer adopts advance selling and perform comparative statics analysis of the equilibrium.

Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.1111/ijet.12193

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:ijethy:v:16:y:2020:i:3:p:306-328

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1742-7355

Access Statistics for this article

International Journal of Economic Theory is currently edited by Kazuo Nishimura and Makoto Yano

More articles in International Journal of Economic Theory from The International Society for Economic Theory
Bibliographic data for series maintained by Wiley Content Delivery ().