Intertemporal price discrimination with forward-looking consumers: Application to the US market for console video-games

Nair, Harikesh S.

doi:10.1007/s11129-007-9026-4

Cited by 302 publications

(106 citation statements)

References 44 publications

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“…Meanwhile, aggregate demand largely approximated our predictions assuming fully strategic buyers, despite nuanced systematic deviations. These results on the demand side are in line with those of empirical studies such as [19,20,34] on essentially aggregate data.…”

supporting

confidence: 88%

“…Recent empirical studies on dynamic pricing include [19,20,34], which report evidence of strategic buying behavior through studying data from the US console video-game market, college textbook market, and air-travel industry. Experimental studies on the Coase conjecture without capacity constraints, including [16,22,23], report results that concur with the empirical works.…”

Section: Literature Reviewmentioning

confidence: 99%

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Dynamic Pricing Decisions and Seller-Buyer Interactions under Capacity Constraints

Mak

Rapoport

Gisches

2018

Games

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Focusing on sellers' pricing decisions and the ensuing seller-buyer interactions, we report an experiment on dynamic pricing with scarcity in the form of capacity constraints. Rational expectations equilibrium solutions are constructed and then tested experimentally with subjects assigned the roles of sellers and buyers. We investigate behavior in two between-subject conditions with high and moderate levels of capacity. Our laboratory market exhibits strategic sophistication: the price offers of sellers and the buyers' aggregate responses largely approximate equilibrium predictions. We also observe systematic deviations from equilibrium benchmarks on both sides of the market. Specifically, in our experiment the sellers are boundedly strategic: their prices often exhibit strategic adjustments to profit from buyers with limited strategic sophistication, but they are also often biased towards equilibrium pricing even when that would not be ex-post optimal.

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supporting

confidence: 88%

Section: Literature Reviewmentioning

confidence: 99%

Dynamic Pricing Decisions and Seller-Buyer Interactions under Capacity Constraints

Mak

Rapoport

Gisches

2018

Games

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“…The most reasonable explanation is intertemporal price discrimination (Nair 2007). Consumers are heterogeneous in their preferences for product characteristics, price, or both.…”

Section: Game Prices and Sales Decline With Agementioning

confidence: 99%

“…The model is dynamic, time 5 Coughlan (2001) reports that production and packaging costs for 32-bit CD-ROM games remains roughly constant at $1.50 per disc. Nair (2007) reports that the royalty fee for the 32-bit Sony PlayStation compatible games was pre-announced and held xed at $10 by Sony throughout the life cycle.…”

Section: Model Frameworkmentioning

confidence: 99%

Failure to Launch in Two-Sided Markets: A Study of the U.S. Video Game Market

Zhou

2012

SSRN Journal

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In the dynamic two-sided market environment, overpricing one side of the market not only discourages demand on that side but also discourages participation on the other side. Over time, this process can lead to a death spiral. This paper develops a dynamic structural model of the video game market to study launch failures in two-sided markets. The paper models consumers' purchase decisions for hardware platforms and aliated software products and software rms' entry and pricing decisions. This paper also develops a Bayesian Markov Chain Monte Carlo approach to estimate dynamic structural models. The results of the counterfactual simulations show that a failed platform could have survived if it had lowered its hardware prices and that it could not have walked out of the death spiral if it had subsidized software entry.

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“…In the literature on industrial organization, there are papers that model both sides of a durable goods market, such as Nair (), Esteban and Shum (), Goettler and Gordon (), Copeland, Dunn, and Hall (), and Chen, Esteban, and Shum (). Relative to our paper, this literature focuses on different questions and employs different methods.…”

mentioning

confidence: 99%

Interest Rates and the Market for New Light Vehicles

Copeland

Hall

Maccini

2018

J of Money Credit Banking

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We study the impact of interest rate changes on the demand and supply of new light vehicles in an environment where consumers and manufacturers face their own interest rates. Interest rate changes impact the auto market through both households and manufacturers. For the impact of rate changes on price and output growth, the household channel is quantitatively more important. A 100 basis‐point increase in both interest rates causes annual growth rates of production to fall from 1.0% to −11.0% and sales to fall from 1.0% to −2.9% in the short run.

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Intertemporal price discrimination with forward-looking consumers: Application to the US market for console video-games

Abstract: Durable-good pricing, Forward-looking consumers, Markov-perfect equilibrium, Numerical dynamic programming, Video-game industry, C25, C61, D91, L11, L12, L16, L68, M31,

Cited by 302 publications

References 44 publications

Dynamic Pricing Decisions and Seller-Buyer Interactions under Capacity Constraints

Dynamic Pricing Decisions and Seller-Buyer Interactions under Capacity Constraints

Failure to Launch in Two-Sided Markets: A Study of the U.S. Video Game Market

Interest Rates and the Market for New Light Vehicles

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