Three essays on the pricing strategies under market frictions : consumer heterogeneity, switching cost and informational asymmetry : 소비자 이질성, 전환 비용 및 정보 비대칭성을 중심으로 = 시장 마찰을 고려한 가격 전략에 관한 연구

Abstract

Price is a simple signal in the market but it is significant for the main players, firms and consumers. Firms, however, confront various constraints in the market when pricing their products or service. Regulators may impose some regulations on firms. Consumers may have different levels of willingness to pay for the products of firms and they have less information than firms have, that is, information asymmetry between firms and consumers. This thesis explores mainly the pricing strategy of firms under these various environments in the real market. The first paper examines the basic service duopoly market where only one firm can provide advanced service. For this upgraded service, some consumers may have additional willingness to pay while others may not. In this case, firm should consider the relative size of different types of consumer groups when pricing the advanced service to maximize its profit. In addition, if a regulator requires some conditions on the advanced service, the regulated firm would have to meet the additional requirements. The second paper analyzes the pricing strategy of firms in a duopoly model where there are different types of consumers owing to the switching cost. Switching cost means the negative costs that a consumer incurs as a result of changing suppliers, brands or products. The pricing strategy depends on the cost structure and market share. The third paper considers the effect of information asymmetry on the pricing strategy of a monopoly firm in the used durable goods. Usually, the firm providing the consumer with the used durable goods knows the quality of the product better than the consumers. That is, information asymmetry about the quality of products exists between a firm and consumers. Also consumers may have information of quality of some portion of products. I also compare the effect of self selection and price discrimination on optimal pricing strategies.