Winning in Retail Market Games: Relative Profit and Logit Demand
Jasper Hoogland,Mathijs de Weerdt,Han La Poutré +2 more
- pp 1794-1800
TLDR
This work examines retailers that maximize their relative profit, which is the (absolute) profit relative to the average profit of the other retailers, and shows that the relative Profit, as a function of the own price, has a unique local maximum.Abstract:
We examine retailers that maximize their relative profit, which is the (absolute) profit relative to the average profit of the other retailers. Customer behavior is modelled by a multinomial logit (MNL) demand model. Although retailers with low retail prices attract more customers than retailers high retail prices, the retailer with the lowest retail price, according to this model, does not attract all the customers. We provide first and second order derivatives, and show that the relative profit, as a function of the own price, has a unique local maximum. Our experiments show that relative profit maximizers "beat" absolute profit maximizers, i.e. They outperform absolute profit maximizers if the goal is to make a higher profit. These results provide insight into market simulation competitions, such as the Power TAC.read more
Citations
More filters
Posted Content
The Strategic Advantage of Negatively Interdependent Preferences
TL;DR: In this article, a subset of players have negatively interdependent preferences and care not only about their own material payoffs but also about their payoffs relative to others, and sufficient conditions under which members of the latter group have a strategic advantage in symmetric equilibria of the game are identified.
BookDOI
Agent-Mediated Electronic Commerce: Designing Trading Strategies and Mechanisms for Electronic Markets
TL;DR: AAMAS Workshop, AMEC 2009, Budapest, Hungary, and IJCAI Workshop, TADA 2009, Pasadena, CA, USA, July 13, 2009, Selected and Revised Papers
Proceedings ArticleDOI
Dynamic Bidding Strategy for Electricity Retailers Considering Multi-type Demand Response
TL;DR: In this article, a mixed integer nonlinear multi-objective optimization model is constructed to maximize the comprehensive profit of electricity retailers and user satisfaction, and the model is linearized based on Big-M and other methods, and transformed into a single objective optimization problem.
Modelización y análisis económicos de servicios 5G basados en "network slicing"
TL;DR: The 5th Generation Mobile technology is characterized by flexibility and scalability, the key component for this purpose is ”network slicing” that allows the integration of services through the same infrastructure.
References
More filters
Journal ArticleDOI
Aggregation and imperfect competition: on the existence of equilibrium
Andrew Caplin,Barry Nalebuff +1 more
TL;DR: In this paper, the authors present an approach to the theory of imperfect competition and apply it to study price competition among differentiated products, including products with multi-dimen-sional attributes.
Journal ArticleDOI
The evolution of Walrasian behavior
TL;DR: In this article, an evolutionary approach to understand Walrasian behavior is described, which avoids any considerations related to the absence of monopoly power or related notion of a large enough population.
Journal ArticleDOI
The Effects of Mergers in Differentiated Products Industries: Logit Demand and Merger Policy
Gregory J. Werden,Luke M. Froeb +1 more
TL;DR: In this paper, the effects of mergers in the logit model were explored both analytically and through simulations of hypothetical mergers of U.S. long distance carriers, finding that only mergers involving AT&T would be likely to lessen welfare significantly.
Journal ArticleDOI
Logit Demand Estimation Under Competitive Pricing Behavior: An Equilibrium Framework
TL;DR: In this paper, the authors develop theoretical propositions about the relationship between value creation and competitive advantage for logit demand systems and use their empirical results to illustrate how firms use alternative value creation strategies to accomplish competitive advantage.