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Full-Text Articles in Economic Theory
Price Signaling In A Two-Market Duopoly, Matthew Hughes
Price Signaling In A Two-Market Duopoly, Matthew Hughes
Williams Honors College, Honors Research Projects
Within any industry, firms typically produce related products over multiple subsequent periods in an attempt to build consumer loyalty and achieve continued sales. Apple releases new iPhones and car companies produce new models every year, relying on consumers believing each new product is of high quality. Firms rely on the spillover effects from previous markets, where firms are able to more easily demonstrate their product's quality to the consumers before purchase. The goal is to find a range of prices which allows the high quality firm to distinguish its type to consumers via the price pH and if spillover effects …