Research on the Optimal Strategies between Information Gatekeepers and Price-Competing Firms

Abstract

In the case where identical firms pay a fee to list prices at a price comparison site and can price discriminate between consumers, how the optimal strategic behaviors of online firms and price comparison site evolve with the time process and the number of competing firms is researched. Using dynamic competitive game models following the diffusion process of price comparison technology, equilibrium results from dynamic competitiveness are obtained. It is predicted that, high price-listed fee policy would discourage the firms to list prices, but increase the expected revenue of each firm. The lowest price and expected revenue of each firm decrease with time process and the increase of firm number. Finally, when information gatekeeper charges a monopoly fee to price-listed firms, the probability at which each firm posts a price ,the lowest price firms decide on and expected revenue are independent of time parameter, but shift downward with increasing the number of competing firms.