Dynamic Strategic Pricing and Speed of Diffusion

Engelbert Dockner and G. E. Fruchter
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G. E. Fruchter: Bar-Ilan University

Journal of Optimization Theory and Applications, 2004, vol. 123, issue 2, No 6, 348 pages

Abstract: Abstract Defining speed of diffusion as the amount of time it takes to get from one penetration level to a higher one, we introduce a dynamic model in which we study the link between pricing policy, speed of diffusion, and number of competitors in the market. Our analysis shows that, in the case of strategic (oligopolistic) competition, the speed of diffusion has an important influence on the optimal pricing policy. In particular, we find that higher speeds of diffusion create an incentive to strategically interacting firms to lower their prices.

Keywords: New product diffusion; pricing strategy; speed of diffusion; differential games; closed-loop strategies (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (7)

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DOI: 10.1007/s10957-004-5152-2

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