Please use this identifier to cite or link to this item:
Title: Price competition with consumer confusion
Authors: Chioveanu, I
Zhou, J
Keywords: Bounded rationality;Framing;Oligopoly markets;Frame dispersion;Price dispersion
Issue Date: 2013
Publisher: INFORMS
Citation: Management Science, 59(11), 2450 - 2469, 2013
Abstract: This paper proposes a model in which identical sellers of a homogeneous product compete in both prices and price frames (i.e., ways to present price information). Frame choices affect the comparability of price offers and may cause consumer confusion and lower price sensitivity. In equilibrium, firms randomize their frame choices to obfuscate price comparisons and sustain positive profits. The nature of the equilibrium depends on whether frame differentiation or frame complexity is more confusing. Moreover, an increase in the number of competitors induces firms to rely more on frame complexity, and this may boost industry profits and lower consumer surplus.
Description: Copyright © 2013, INFORMS. Article posted with permission.
ISSN: 0025-1909
Appears in Collections:Economics and Finance
Dept of Economics and Finance Research Papers

Files in This Item:
File Description SizeFormat 
Fulltext.pdf379.62 kBAdobe PDFView/Open

Items in BURA are protected by copyright, with all rights reserved, unless otherwise indicated.