Thursday, March 2, 2023 12:00 PM EST
Vernon Smith Hall (formerly Metropolitan Building), Room 5075
The Interdisciplinary Center for Economic Science (ICES) presents an ICES Brown Bag Lecture featuring:
George Mason University
Consumer Information, Heterogeneous Sellers, and Oligopolistic Competition
Consumers vary in price information: captive consumers may know only one price from a seller, while informed consumers know several prices. We study a homogeneous-good oligopoly market where sellers of heterogeneous costs compete on price under limited consumer information. We characterize a unique symmetric monotone Bayesian equilibrium. Our main results show that 1) the number of sellers alone does not affect prices given consumer information; 2) prices fall when captive consumers become sufficiently more informed; 3) prices of sellers with higher (lower) costs rise (fall) when informed consumers become sufficiently more informed. The effects on seller profits and consumer surplus are also examined and illustrated through a triopoly example.
For more information about the Brown Bag Lectures, please visit the Brown Bag Schedule homepage.