Introductory Price as a Signal of Cost in a Model of Repeat Business

Preprint
Publisher Website
Google Scholar
    • preprint
      • Published in RePEc
Abstract
A two-period game between firms and consumers is considered. Firms are privately informed about their individual costs, and consumers must pay a search cost in order to learn a firm's current price. Consumers thus have incentive to use introductory price as a signal of cost and, hence, second period price. Recent refinements of the sequential equilibrium concept are employed, and the resulting equilibria involve low introductory prices (introductory sales). (This abstract was borrowed from another version of this item.)
All Related Versions

This publication has 0 references indexed in Scilit: