Dynamic Pricing and Service Competition when Consumers Learn about Service

香港科技大学LIU Qian教授12月25日（周二）下午3.30在清华大学经管学院伟伦楼385做Dynamic Pricing and Service Competition when Consumers Learn about Service的学术报告，欢迎大家积极参加。

Speaker: LIU Qian

Time: Dec 25th,3.30pm

Location: Weilun Building 385, School of Economics and Management, Tsinghua University

Title: Dynamic Pricing and Service Competition when Consumers Learn about Service

Abstract:

We consider a market with a large number of service firms which provide differentiated service products at different prices and with waiting times. Unlike prices, waiting times are experienced by consumers only after their purchases. We thus assume that consumers use observed past information on waiting times to form their estimates according to an exponential smoothing model. We embed this consumer learning process in a dynamic game model of price and service competition over an infinite time horizon. As each firm has to track the price and service information of all the other firms, it is essentially infeasible to analyze this complex dynamic game when the number of firms grows. To circumvent the computational difficulty, we apply the recently proposed idea of mean field equilibrium to study an approximate game in which each firm maximizes its profit only with respect to the long-run average price and average waiting time. We show that such mean field equilibrium is an epsilon-Nash equilibrium to the original dynamic game under certain conditions. We also characterize the stationary equilibrium pair of price and waiting time for each firm, and investigate how they are affected by consumer learning speed, their price and service sensitivities, firms’ service costs and the discount factor.