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Advance selling, competition, and brand substitutability

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  • Oksana Loginova

Abstract

I analyze how information structure influences the profitability of advance selling in the presence of a competitor. Two firms produce different brands serving heterogeneous consumers. In advance, consumers know the utility they will get from their preferred brand but can be uninformed about its identity, how much they will dislike their nonpreferred brand, or both. The firms set prices in the main selling season (when uncertainty is resolved) simultaneously, but one firm can set an advance selling price (while there is still uncertainty). Competition enhances the profitability of advance selling when consumers are uninformed about which brand they will prefer.

Suggested Citation

  • Oksana Loginova, 2021. "Advance selling, competition, and brand substitutability," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(7), pages 1765-1781, October.
    • Handle: RePEc:wly:mgtdec:v:42:y:2021:i:7:p:1765-1781
    DOI: 10.1002/mde.3343
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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