Retail prices in stores are often lower than widely advertised list prices. We study the competitive role of such list prices in a homogeneous product duopoly where firms first set list prices before setting possibly reduced retail prices. Building on Varian (1980), we assume that some consumers observe no prices, some observe all prices, and some only observe the more salient list prices. We show that when the latter group chooses myopically, firms’ ability to use list prices lowers average transaction prices. This effect is weakened when these consumers are rational. The possibility to use list prices facilitates collusion.
We are delighted to let everyone know that our research group will host a guest scientist Tamás Bódai in the following few months.
Tamás is a Young Scientist Fellow of the Institute for Basic Science, Korean, and a research professor of Pusan National University. He is working on various aspects of the forced — mainly man-made — change of the climate system, utilising climate ensemble simulations. His special interests are in teleconnections (like the remote connection of the Indian summer monsoon and the El Nino-Southern Oscillation in the Pacific Ocean); extreme events (precipitation, floods, wet-bulb globe temperature, heat waves, etc.) and bifurcations (e.g. the potential collapse of the Greenland ice sheet).
With Prof László A. Kóczy, Tamás will explore future climate scenarios using a self-developed climate emulator which can be coupled with so-called Integrated Assessment Models (IAM), and investigate the effects of competition and cooperation. Tamás’ special interest is regarding geoengineering, namely, its potential role in a climate policy mix, possibly regulated internationally.
Please feel free to go round his room or contact him by email (email@example.com, firstname.lastname@example.org) in order to have/arrange for a discussion. All points of view are welcome! — Tamás is a believer in interdisciplinary research, and an engineering graduate himself.