Loading...

Impact of Market Heterogeneity on Location and Pricing

Sedghi, Nafiseh | 2020

425 Viewed
  1. Type of Document: Ph.D. Dissertation
  2. Language: Farsi
  3. Document No: 53365 (01)
  4. University: Sharif University of Technology
  5. Department: Industrial Engineering
  6. Advisor(s): Shavandi, Hassan; Abouee-Mehrizi, Hossein
  7. Abstract:
  8. Market heterogeneity is an essential element in the strategic decision making of firms. Today, differences in urban structures, product varieties, and information availability have created new heterogeneities that deviate from the ones in the classic literature of marketing and industrial organization. Thus a new perspective is needed for analyzing the firms' decisions in these markets. In this thesis, we study the effect of heterogeneous markets on the pricing, location, quality, and product line introduction strategy of a firm to find the optimal reaction of a firm entering these markets. In this regard, we first assume that consumers are not only located at different places in the market but also have different valuations for the new product that the firm offers. We also assume that consumers' valuation depends on their location. We then investigate the problem of quality differentiation in such a setting. Furthermore, to show the effect of information on the consumer's purchasing decision, we assume that consumers have different valuations for the new product based on the information they receive in a selling season. To investigate this heterogeneity, we focus on the social learning phenomenon and seek the strategic reaction of the firm in the presence of such learning.Considering these heterogeneities in the classical models results in a nonlinear, non-concave optimization problem that cannot be directly solved. Therefore, to solve each optimization problem, we partition the solution space into several subspaces that have the desired structure; then, by comparing and unifying these sub solutions, we analyze the strategies of the firm. Finally, we show how each kind of heterogeneity impacts the firm's decisions. We derive conditions that ignoring such heterogeneity in the market reduces the firm's profit substantially
  9. Keywords:
  10. Quality ; Pricing ; Location ; Social Learning Model ; Heterogeneous Markets ; Strategic Decision Making

 Digital Object List

 Bookmark

No TOC