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| Author: | Bergemann, D. Valimaki, J. |
| Title: | Market diffusion with two-sided learning |
| Journal: | RAND Journal of Economics
1997 : WINTER, VOL. 28:4, p. 773-795 |
| Index terms: | MARKETS DIFFUSION ENVIRONMENT |
| Language: | eng |
| Abstract: | The authors analyze the diffusion of a new product of uncertain value in a duopolistic market. Both sides of the market, buyers and sellers, learn the true value of the new product from experiments with it. Buyers have heterogeneous preferences over the products and sellers compete in prices. The prices policies and market shares in the unique Markov-perfect equilibrium are obtained explicitly. The dynamics of the equilibrium market shares display excessive sales of the new product relative to the social optimum in early stages and too-low sales later on. |
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