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Recently, the paper Dynamic Price Competition, Learning-By-Doing and Strategic Buyers by Professor Jia Dun from the HSBC Business School of Peking University and his collaborators was officially accepted by the top international economics journal American Economic Review and will be published soon
The paper was completed by the lead author Professor Dun Jia and the lead author Professor Andrew Sweeting of the University of Maryland, as well as Professor Hui Shen and Dr.
" The American Economic Review " ( AER ) was founded by the American Economic Association (AEA) in 1911.
It is known as the most important and influential journal of economic theory in the United States, and it is also a recognized field of economics in the world.
The goal of maximizing market efficiency often faces the contradiction between the centralized production of a single high-efficiency manufacturer or the decentralized operation of multiple manufacturers to maintain the market competition mechanism
The classic dynamic pricing competition theory finds that because companies adopt aggressive pricing strategies in the course of market competition, they can cause competitors to exit the market prematurely (Firm Exit), thereby gaining a mid- to long-term market monopoly
Professor Jia Dun and his collaborators modeled the demand side that has been neglected for a long time in the classic framework, and introduced "strategic and forward-looking" consumers, that is, consumers can choose which manufacturer to obtain products from for consumption.
Indirectly dynamically balance the operating efficiency of different companies, thereby maximizing their long-term utility
Strategic behaviors on the demand side can lead to the ineffectiveness of aggressive pricing strategies, thereby maintaining a mid- to long-term market competition environment for multiple manufacturers, and at the same time improving consumer welfare and overall social welfare
The research has important theoretical contributions and rich practical significance:
The study found that even if there are a small proportion or even a low level of strategic consumers, the unavoidable multiple equilibrium problems in the classic manufacturer’s dynamic pricing framework are no longer significant.
In particular, market monopoly equilibrium can be eliminated, and market extremes With a high probability, a fully competitive equilibrium result can be achieved in the medium and long term
The research has made important methodological contributions to solving the manufacturer's pricing game model
This article uses the classic Homotopy Algorithm to determine the "balanced set" method as a reference.
At the industry level, the study found that only considering the supply-side pricing behavior is not enough to provide sufficient evidence for the necessity of antitrust review.
There are single or multiple important "strategic and forward-looking" buyers in many industries.
Its behavior has significantly determined the structure of the industry, and the anti-monopoly policy needs to consider the dynamic balance between the supply side and the demand side at the same time
As far as the macro economy is concerned, there are significant differences in the concentration of sellers and buyers in different industries.
The pricing stickiness at the aggregate level has a micro foundation at the industry level, and the effectiveness of monetary policy transmission to different industries is therefore significantly heterogeneous.
Jia Dun is an assistant professor at the HSBC Business School of Peking University and a Ph.
in economics from the University of Maryland.
His research areas include macroeconomics, macrofinance, quantitative model algorithms and Chinese economy.
Current research work focuses on the micro-foundation of quantitative macro-models-corporate pricing and manufacturers Dynamics and related applications of incomplete information in monetary policy transmission and macro-financial fields
At present, he has published many papers (including acceptance) in top domestic and foreign journals such as American Economic Review and "Financial Research", and at the same time presides over a National Natural Science Foundation project