Competitive Pricing of Innovative Products with Consumers’ Social Learning

Lu Xiao, Hang Zhang and Yong Qin
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Lu Xiao: School of Management, Guangdong University of Technology, Guangzhou 510520, China
Hang Zhang: China Development Bank Hubei Branch, Wuhan 430061, China
Yong Qin: Training Base, Army Logistics University of PLA, Wuhan 430035, China

Sustainability, 2020, vol. 12, issue 9, 1-13

Abstract: Consumers often face valuation uncertainty when innovative products are introduced into market, and they may update the valuation about product quality based on historical sales information over time. Based on this background, this study constructed a two-period duopoly model of innovative products and investigated the effect of consumers’ social learning on enterprises’ pricing strategies and profits. Optimal pricing decisions for competitive enterprises with and without consumers’ social learning were obtained. It was found that consumers’ social learning will intensify competition between enterprises, which will lower their prices and profits. The stronger the learning intensity of consumers, the greater the profit loss for enterprises.

Keywords: innovative products; pricing strategies; competition; social learning (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
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