Impact of Increasing Firms' Consumer Demand Perceptions on Market Outcomes
Kenta Tanaka,
Keisaku Higashida and
Shunsuke Managi
Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)
Abstract:
The rapid evolution and spread of artificial intelligence (AI) and algorithms significantly improve companies’ recognition of consumer demands. AI and algorithmic big data analyses have been introduced into firms’ practical decision-making and marketing activities. However, there are insufficient empirical analyses available to determine the impact of improving a firm’s cognitive ability (via algorithmic data analyses) on actual market outcomes (price formation, each firm’s surplus, and social surplus). Using a laboratory experimental approach, this study examines the market outcomes, such as the degree of product differentiation and prices, when firms utilize an algorithmic demand-forecasting system in a duopoly. The results indicate that the forecasting system increases the cognitive abilities of the participants regarding their consumers’ preferences. Additionally, the introduction of the algorithmic demand-forecasting system increases the consumer surplus in the market.
Pages: 33 pages
Date: 2022-09
New Economics Papers: this item is included in nep-big and nep-ind
References: Add references at CitEc
Citations:
Downloads: (external link)
https://www.rieti.go.jp/jp/publications/dp/22e095.pdf (application/pdf)
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:eti:dpaper:22095
Access Statistics for this paper
More papers in Discussion papers from Research Institute of Economy, Trade and Industry (RIETI) Contact information at EDIRC.
Bibliographic data for series maintained by TANIMOTO, Toko ().