Search results

Most pricing studies assume that firms have complete information about demand. In practice, managers must make decisions, given incomplete information about the demand for their own products as well as those of their rivals. This paper develops a duopoly pricing model in which firms market differentiated products in a world of uncertainty. Results show that the predictions of standard strategic pricing models may not hold when firms face parameter uncertainty and are risk‐averse. Under well‐defined conditions, there may be a “first‐mover” disadvantage to the firm that attempts to be the Stackelberg price leader in the market, especially in a market where demand is highly uncertain. Interestingly, if parameter uncertainty is sufficiently high, it may even be necessary for the price leader to share market information with its rival. When firms are risk‐averse, uncertainty generally decreases equilibrium prices and the variabilities of profits.

The purpose of this paper is twofold: to examine the plight of a particular segment of the poor – the working poor – in the USA relative to their exclusion from traditional financial markets and their patronage of the payday loan market; and to propose a framework that offers guidance to law makers in making laws/crafting policies that help the working poor gain better access to credit.

This is a conceptual paper that reviews the literature on the payday loan market and uses its findings to propose a strategy to ameliorate the plight of the working poor.

The study integrates the findings of studies on the payday loan market with theories of corporate social responsibility. Using these findings the authors develop a framework that can guide policy makers in making policies that address the exclusion of the working poor from financial markets.

As a conceptual paper based on theories, the study does not provide empirical validation. The paper develops a framework that could guide policy makers as they consider legislation to address the financial exclusion of the poor, particularly with regard to payday loans.

The paper proposes a policy framework to solve the “debt treadmill” problems of the working poor.

The consequent improvement of the financial conditions of the working poor improves society in general.

To the best of the knowledge, this is the first marketing paper that has proposed a structural framework to address the exclusion of the working poor from the credit markets.

This paper has three objectives. First, we develop an equilibrium pricing model in which consumers have incomplete information about both product qualities and prices. Specifically, manufacturers can use high prices to signal high quality to uninformed consumers. Furthermore, prices of any given brand can vary geographically across retail outlets. We show that previous models are special cases of our model. Specifically, the hedonic regression model assumes that consumers have full information about all product qualities and prices. Second, we propose a methodology for testing price‐signaling models. Third, we test our model using data from consumer reports for several consumer durable and nondurable products. The results show that firms use prices to signal quality, regardless of whether they market durable or nondurable products. The results do not support the popular theory that markets for experience goods are more efficient than those for search goods. Finally, our model outperforms the standard hedonic regression model for four of the five product categories analyzed.