Competitive product positioning and pricing under brand loyalty
product differentiation, spatial competition, brand loyalty, pricing
We analyze the pure strategy equilibrium in prices and the corresponding equilibrium product differentiation in a two-stage linear spatial competition duopoly model with quadratic transportation costs. Both firms have segments of brand loyal and non-brand loyal consumer segments, with the two firms primarily competing on the brand switching segment. A comparative statics analysis is undertaken, looking at the impact of a change in size, presence, and asymmetry of the brand loyal segments.
Enstroem, R. & Ghosh, S. (2016). Competitive product positioning and pricing under brand loyalty. Indian Economic Review, 51(1-2), 69–81.
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