Model Persaingan Harga dengan Loyalitas Dinamis

Abstract

Introduction dynamic loyalty leads new result compare to extant static promotion models. Suprisingly, we find that while a strong firm has more dynamic loyal consumers and larger market share it offers a lower average price than a weak firm. One might also expect that increased strength of a rival leads to lower profits, but we show that profits of the strong firm may increase if the weak firm creates more dynamic loyalty. The Markov Chain will be used to generate a fix dynamic model. We benchmark the dynamic model against a case where firms are myopic and find a differential impact on each firms profits. The weak firm benefits from myopia and earns lower profits in the dynamic game. However, profits of the strong firms may increase in the dynamic game when the rival is very weak. Finally, we obtain predictions on serial and contemporaneous price correlation that we relate to empirical studies.