Cutting-edge Research by Faculty of IIM Bangalore

Faculty members at IIM Bangalore generate knowledge through cutting-edge research in all functional areas of management that would benefit public and private sector companies, and government and society in general. The knowledge generated by IIMB faculty appears in leading academic journals with high citation index and impact factor. Many textbooks and working papers are written on a regular basis. Research carried out by IIMB is used to augment new courses and executive education programmes.
Journal Name: Journal of Economic Theory Vol. 165, September 2016, Pg: 565-600

Journal Title: Social learning and delay in a dynamic model of price competition

This paper studies dynamic price competition between two firms selling differentiated durable goods to two buyers whose valuations of the two goods depend on their own private type as well as that of the other buyer. We derive a key intertemporal property of the equilibrium prices and construct an equilibrium based on this property. We show that social learning reduces the equilibrium prices in the sense that when the buyers are more interdependent and hence have a stronger incentive to wait and see, the firms respond by lowering their period 1 prices. Interestingly, we find that this response by the firms along with the intertemporal property of the equilibrium prices implies that buyers delay their decisions less often when they become more interdependent.
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Journal Written by Manaswini Bhalla, Economics and Social Science, Indian Institute of Management Bangalore
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