Firm competition in a probabilistic framework of consumer choice
Trading and Market Microstructure
2014-03-26 v1 Physics and Society
General Finance
Abstract
We develop a probabilistic consumer choice framework based on information asymmetry between consumers and firms. This framework makes it possible to study market competition of several firms by both quality and price of their products. We find Nash market equilibria and other optimal strategies in various situations ranging from competition of two identical firms to firms of different sizes and firms which improve their efficiency.
Cite
@article{arxiv.1312.3826,
title = {Firm competition in a probabilistic framework of consumer choice},
author = {Hao Liao and Rui Xiao and Duanbing Chen and Matus Medo and Yi-Cheng Zhang},
journal= {arXiv preprint arXiv:1312.3826},
year = {2014}
}
Comments
9 pages, 7 figures