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Pricing leadership decisions of competing firms with consumer learning

Rui Hou, Zibin Cui and You Zhao

Managerial and Decision Economics, 2022, vol. 43, issue 6, 2326-2346

Abstract: We consider two competing firms that sell two quality‐differentiated products over two periods, in which the high‐ or low‐quality firms have the option to act as a pricing leader or follower in the first or second periods. Two groups of consumers make their purchase decisions in the first or second periods, with the former consumers using the experience available to the latter from online communities (e.g., TikTok). Our analysis indicates that competition intensity and consumers' reviews are two interacting forces that steer the equilibrium decisions of the two competing firms.

Date: 2022
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