Abstract: We study a duopoly market in which customers are heterogeneous in their sensitivity to price and leadtime, and can be segmented as price sensitive or time sensitive. Each rm tailors (dierentiates) its products/services for the two customer classes solely based on price and the corresponding guaranteed leadtime. Our objective is to understand how competition aects price and leadtime dierentiation of the rms since the extant literature reports very contradicting results. Our results suggest that when rms use dedicated resources to serve the two market segments, pure price competition always tends to decrease individual prices as well as price dierentiation, irrespective of the market behavior. Further, the eect of competition is more pronounced when customers
Publication Year: 2013
Publication Date: 2013-01-01
Language: en
Type: article
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