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Empirical analysis of competitive product line pricing decisions: lead, follow, or move together?

Kadiyali, Vrinda and Vilcassim, Naufel J. and Chintagunta, Pradeep K. (1996) Empirical analysis of competitive product line pricing decisions: lead, follow, or move together? Journal of Business, 69 (4). pp. 459-487. ISSN 0021-9398

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Abstract

Researchers have recently developed models for determining which market conduct best describes observed data. We apply these techniques from the "new empirical industrial organization" literature to the competitive product line pricing decision, where a firm strategically prices its brands when determining the profit-maximizing conduct in the market. Demand, cost, and market structure are estimated endogenously. Empirical results from analyzing price competition in the laundry detergent market between Procter and Gamble selling Tide and EraPlus and Lever Brothers offering Wisk and Surf indicate that each firm positions its strong brand as a Stackelberg leader, with the rival's minor brand being the follower.

Item Type: Article
Official URL: https://www.jstor.org/journal/jbusiness
Additional Information: © 1996 University of Chicago
Subjects: H Social Sciences > HF Commerce
H Social Sciences > HG Finance
Sets: Departments > Management
Date Deposited: 01 Mar 2017 10:42
Last Modified: 01 Nov 2017 09:13
URI: http://eprints.lse.ac.uk/id/eprint/69455

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