Empirical Analysis of Competitive Pricing Strategies with Complementary Product Lines

摘要: We build an econometric model of a household's purchase incidence and brand choice decisions in complementary product categories to account for cross-category dependence demand. Complementarity is modeled as the additional utility that household derives from joint consumption brands categories. estimate proposed multi-category demand using scanner panel data on cake mix frosting Using estimated input, we investigate whether observed retail prices two are consistent with joint-category profit maximization behavior part retailer. also manufacturers' pricing maximizing sum profits their (bearing same umbrella name) both Lastly, nature vertical channel interactions between manufacturers find our fits households' purchasing outcomes better than traditional single-category models (which yield significantly under-stated within-category price elasticities). While each one category complement every other category, complementarity elasticity found be strongest respect name category. by retailer across categories, Vertical Nash game manufacturer. Finally, Bertrand-Nash among brands' In fact, dominant strategy