Bar-Ilan University Reports Findings in Economic Dynamics (Pricing competition with inventory considerations in a hazard rate-prone market of…

Insurance Business Weekly

Bar-Ilan University Reports Findings in Economic Dynamics (Pricing competition with inventory considerations in a hazard rate-prone market of durables)

By a News Reporter-Staff News Editor at Insurance Business Weekly -- Data detailed on Economics - Economic Dynamics have been presented. According to news reporting out of Ramat Gan, Israel, by VerticalNews editors, the research stated, "This paper addresses Bertrand-type pricing competition between two firms producing partially differentiated durables over a finite planning horizon. The demand for durables, characterized by increasing returns of scale to a price reduction, is led by the hazard rate."

Our news journalists obtained a quote from the research from Bar-Ilan University, "While the effect of inventories on pricing of non-durables is widely recognized, the management and marketing literature typically overlooks this effect in regard to horizontally competing firms for durables. In this paper we show that the pricing trajectory of durables may significantly alter when inventory dynamics are accounted for. In particular, the price may hike upwards before dropping; gradually grow; or even stay at the same level over the entire product life while it would only decline if inventories and related costs are disregarded."

According to the news editors, the research concluded: "Furthermore, the well-known, optimal pricing strategy of following the pattern of sales does not necessarily confirm even for symmetric equilibria when the competing firms have either an inventory surplus or shortage."

For more information on this research see: Pricing competition with inventory considerations in a hazard rate-prone market of durables. Journal of Economic Dynamics & Control, 2016;73():298-313. Journal of Economic Dynamics & Control can be contacted at: Elsevier Science Bv, PO Box 211, 1000 Ae Amsterdam, Netherlands. (Elsevier - www.elsevier.com; Journal of Economic Dynamics & Control - www.journals.elsevier.com/journal-of-economic-dynamics-and-control/)

Our news journalists report that additional information may be obtained by contacting K. Kogan, Bar Ilan University, Dept. of Management, IL-52100 Ramat Gan, Israel.

Keywords for this news article include: Ramat Gan, Israel, Asia, Economic Dynamics, Economics, Bar-Ilan University.