EconPapers    
Economics at your fingertips  
 

Prominence, Complexity, and Pricing

Ioana Chioveanu ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper analyzes prominence in a homogeneous product market where two firms simultaneously choose both prices and price complexity levels. Complexity limits competing offers' comparability and results in consumer confusion. Confused consumers are more likely to buy from the prominent firm. In equilibrium there is dispersion in both prices and price complexity. The nature of equilibrium depends on prominence. Compared to its rival, the prominent firm makes higher profit, associates a smaller price range with lowest complexity, puts lower probability on lowest complexity, and sets a higher average price. However, higher prominence may benefit consumers and, conditional on choosing lowest complexity, the prominent firm's average price is lower, which is consistent with confused consumers' bias.

Keywords: oligopoly markets; consumer confusion; prominence; price complexity; price dispersion (search for similar items in EconPapers)
JEL-codes: D03 D43 L13 (search for similar items in EconPapers)
Date: 2017-08-31
New Economics Papers: this item is included in nep-bec, nep-com, nep-ind, nep-mic and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/81078/2/MPRA_paper_81078.pdf original version (application/pdf)

Related works:
Journal Article: Prominence, complexity, and pricing (2019) Downloads
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:pra:mprapa:81078

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().

 
Page updated 2020-05-05
Handle: RePEc:pra:mprapa:81078