Price Competition and Firm Strategies in Oligopolies

This dissertation is part of the effort to contribute to our understanding of Price Competition and Firm Strategies in oligopolistic markets with certain characteristics. It comprises of three chapters. Chapter 1 provides the introduction and background of the research and a brief summary of results. Chapter 2: Firms practice poaching of their rival’s customers in markets where they are able to identify between their own customers and those of the rivals. This practice results in inefficiently high switching. In some of these markets firms also use strategies that make poaching by rival firms harder. In this chapter I explore the practice of firms requiring customers to sign contracts that are of pre-specified duration specifying early termination charges (or breach penalty).

Contents

1. Chapter 1: Introduction
1.1 Motivation and Introduction to Chapter 2
1.2 Motivation and Introduction to Chapter 3
2. Chapter 2: Countering Consumer Poaching: The case of Contracts with Breach Penalties
2.1 Introduction
2.2 The Homogeneous Product Model
2.2.1 The Base Model
2.2.1a Second period Competition
2.2.1b First Period Competition
2.2.2 Contract with Breach Penalty
2.3 Ex-ante Homogeneous Ex-Post Product Differentiation Model
2.3.1 No Contract with Breach Penalty case
2.3.1a Second Period Competition
2.3.1a Socially efficient Switching
2.3.1b First Period Competition
2.3.2 Contract with Breach Penalty
2.3.2a Second Period Competition
2.3.2b Equilibrium Switching Outcome
2.3.2b First Period Competition
2.4 Conclusions
3. Strategic Complementarities and the Incentive to Raise Prices: Evidence from the US Wholesale Gasoline Market
3.1 Introduction
3.2 The Model
3.2.1 Case I
3.2.2 Case II
3.3 A brief description of the US Wholesale Gasoline Industry
3.4. Evidence from the US Wholesale Market for Unbranded Gasoline: Data and Empirical Estimation
3.5 Conclusions
A. Appendix to Chapter 2
A.1 Proof of Proposition 1
A.2 Proof of Proposition 2
A.3 Proof of Proposition 3
A.4 Proof of Proposition 4
A.5 Proof of Proposition 5
A.6 Derivation of Optimal Penalty
B. Appendix to Chapter 3
B.1 Matlab Codes and Results
B.1a. Case I: The Three firm Case
B.1b. Case II: The two firm Case
Bibliography

Author: Singh, Heisnam Thoihen

Source: University of Maryland

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