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Publicações

Publicações por Joana Resende

2011

Dynamic Games of Network Effects

Autores
Garcia, F; Resende, J;

Publicação
DYNAMICS, GAMES AND SCIENCE II

Abstract
Network effects occur when the benefit that agents derive from a good or service depends on how many other agents adopt the same good or service. This strategic complementarity between consumers' actions has several implications on tie behavior of firms: For instance, firms need to gain advantage from early marketing stages. Network effects are intrinsically a dynamic phenomenon: past consumption of the good influences the utility of present consumers. This effect can be either direct, when consumers value interaction with their peers, and/or indirect, through an increase in the quality of the good. This chapter surveys the literature on dynamic network effects. First we provide general formulations for the modelization of network effects in a dynamic setting. Second, we analyse recent developments in the literature on firms' strategies in the context of dynamic network effects. We survey the literature both on monopoly and oligopoly markets. In the case of oligopoly markets, we distinguish between situations in which firms produce horizontally and vertically differentiated goods. Main results on pricing and evolution of market shares are exposed.

2008

The Economic Advantage of Being the "Voice of the Majority"

Autores
Resende, J;

Publicação
JOURNAL OF MEDIA ECONOMICS

Abstract
This article analyzes price competition in it duopolistic newspaper industry. where politically differentiated newspapers compete in 2 distinct markets: circulation and advertising. Assuming that 1 of the newspapers represents the "voice of the majority," the theory of the circulation spiral is investigated and whether the interdependence between newspapers' demands in the circulation and advertising markets favors the majority's newspaper to the detriment of the minority's newspaper is investigated.

2012

Differentiated credence goods and price competition

Autores
Gabszewicz, JJ; Resende, J;

Publicação
INFORMATION ECONOMICS AND POLICY

Abstract
This paper analyses price competition between two firms producing horizontally and vertically differentiated goods. These are assumed to be credence goods, as consumers can hardly ascertain the quality of the commodities. To illustrate the model, we adapt it to represent a newspaper industry with two outlets, when the population of readers have preferences both on the political stance of the newspapers and on the accuracy of the news they dispatch.

2022

Dynamic monopoly and consumers profiling accuracy

Autores
Laussel, D; Long, NV; Resende, J;

Publicação
JOURNAL OF ECONOMICS & MANAGEMENT STRATEGY

Abstract
Using a Markov-perfect equilibrium model, we show that the use of customer data to practice intertemporal price discrimination will improve monopoly profit if and only if information precision is higher than a certain threshold level. This U-shaped relationship lends support to a popular view that knowledge is good only if it is sufficiently refined. When information accuracy can only be achieved through costly investment, we find that investing in profiling is profitable only if this allows to reach a high enough level of information precision. Consumers expected surplus being a hump-shaped function of information accuracy, we show that consumers have an incentive to lobby for privacy protection legislation which raises the cost of monopoly's investment in information accuracy. However, this cost should not dissuade firms to collect some information on customers' tastes, as the absence of consumers' profiling is actually detrimental to consumers.

2022

When Is Product Personalization Profit-Enhancing? A Behavior-Based Discrimination Model

Autores
Laussel, D; Resende, J;

Publicação
MANAGEMENT SCIENCE

Abstract
This paper investigates duopoly competition when horizontally differentiated firms are able to make personalized product-price offers to returning customers, within a behavior-based discrimination model. In the second period, firms can profile old customers according to their preferences, selling them targeted products at personalized prices. Product-price personalization (PP) allows firms to retain all old customers, eliminating second-period customer poaching. The overall profit effects of PP are shown to be ambiguous. In the second period, PP improves the matching between customers??? preferences and firms??? offers, but firms do not make any revenues in the rival???s turf. In the Bertrand outcome, second-period profits only increase for both firms if the size of their old turfs are not too different or initial products are not too differentiated. However, the additional secondperiod profits may be offset by lower first-period profits. PP is likely to increase firms??? overall discounted profits when consumers??? (firms???) discount factor is low (high) and firms??? initial products are exogenous and sufficiently different. When the location of initial products is endogenous, profits are hurt because of an additional location (strategic) effect aggravating head-to-head competition in the first period. Likewise, when a fraction of active consumers conceals their identity, PP increases second-period profits at the cost of aggressive first-period price competition. Finally, we show that the room for profitable PP enlarges considerably if firms rely on PP as an effective device to sustain tacit collusive outcomes, with firms credibly threatening to respond to first-period price deviations with

2016

CONFORMITY-BASED BEHAVIOR AND THE DYNAMICS OF PRICE COMPETITION: A NEW RATIONALE FOR FASHION SHIFTS

Autores
Garcia, F; Resende, J;

Publicação
JOURNAL OF DYNAMICS AND GAMES

Abstract
This paper deals with dynamic price competition in markets in which the perception of consumers regarding the value of goods depends on the choices of other consumers in the market. In particular, we consider the case in which consumers exhibit conformist preferences, which leads them to imitate their peers. In the context of a finite horizon model, we show that conformity based behavior creates new channels of dynamic interaction between firms, changing the nature of price competition. We focus on the case of high network effects for which we obtain V-shaped equilibrium price paths and oscillating trajectories of market shares. We provide also a new rationale for the inversion of fashion trends.

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