Demand with Consumption Externalities

2014 ◽  
Author(s):  
Finn Christensen
Keyword(s):  
Consumption Externalities

scholarly journals Consumption Externalities and Diffusion in Pharmaceutical Markets: Antiulcer Drugs

2003 ◽  
Vol 51 (2) ◽  
pp. 243-270 ◽  
Author(s):  
Ernst R. Berndt ◽  
Robert S. Pindyck ◽  
Pierre Azoulay
Keyword(s):  
Consumption Externalities ◽  
Pharmaceutical Markets ◽  
Antiulcer Drugs ◽  
And Diffusion

A note on dynamic monopoly pricing under consumption externalities

2014 ◽  
Vol 124 (1) ◽  
pp. 1-8 ◽  
Author(s):  
Kaito Hashimoto ◽  
Nobuo Matsubayashi
Keyword(s):  
Consumption Externalities ◽  
Monopoly Pricing ◽  
Dynamic Monopoly

Entry Deterrence, Coordinating Advertising and Pricing in Markets with Consumption Externalities

2018 ◽  
Vol 19 (2) ◽  
Author(s):  
Adele Whelan
Keyword(s):  
Price Competition ◽  
Entry Deterrence ◽  
Fixed Cost ◽  
Pricing Strategies ◽  
Consumption Externalities ◽  
Strategic Investment ◽  
Incumbent Firm ◽  
First Mover Advantage ◽  
Success Function ◽  
Consumption Externality

Abstract This paper extends the entry deterrence literature by examining coordinating advertising and pricing in markets with consumption externalities using a stochastic success function. Optimal advertising and pricing strategies are analysed when an incumbent firm faces a challenger with a product of equal quality. I show that strategic entry deterrence using advertising is possible and optimal entry deterrence involves strategic pre-commitment to over-investment relative to the non-strategic simultaneous advertising benchmark. I show that when entry deterrence is not possible the incumbent does not possess a first mover advantage and optimal entry accommodation involves strategic investment in advertising with intensified price competition congruent with the non-strategic simultaneous advertising benchmark. The findings suggest that an incumbent’s ability to deter entry through coordinating advertising in a market with products of equal quality is sensitive to the size of the fixed cost of entry that the challenger must incur and the consumption externality parameter.

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