Consumer Arbitrage and Product Characteristics: A Theoretical Analysis

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Title:	Consumer Arbitrage and Product Characteristics: A Theoretical Analysis
Authors:	王雅津
Date:	2010-06
Issue Date:	2010-12-10 15:13:52 (UTC+8)
Abstract:	To come up with personal arbitrage, we designed a consumer participation game in a horizontal product differentiated model. Consumer participation is divided into two categories: consumerization (ex-ante participation) and customerization (ex-post participation). Consequently, when a firm posits production characteristic by consumer participation, the payoff and economic welfare will change. Capturing the spirit of consumer participation allows for personalized interaction between consumers and a monopoly firm in different stages of production and retailing. The main findings are: the consumer uses ex-post participation to reduce preference deviations, increase welfare for both producer surplus and the consumer surplus. In addition, when the consumer uses ex-ante participation, consumer surplus will rise and welfare will rise if and only if the set-up costs are not too high. The firm can also utilize price incentive to induce consumer’s arbitrage behavior.
Appears in Collections:	[金融管理系] 會議論文

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