The Sellers and the Store: Explorations of a Moderated
Oligopoly
Our earlier work explored the interactions among a group
of sellers in an iterated oligopoly, as they competed using price and other
marketing instruments. The sellers were the brand managers of retail coffee,
being sold in a supermarket chain. But the sellers are not entirely free
to compete as they may -- the supermarket manages the degree of competition
among them by allowing only each to price most low only a week at a time,
and only a few brands can offer other inducements (such as aisle displays,
coupons, and in-store newspaper advertisements) at a time. The supermarket
is looking to maximise its profit over
time by attracting more buyers with its displays and advertisements.
Just what does the extra player do to the oligopoly game?
We model the brands' interactions and the supermarket's moderation, as all
seek to maximise long-term profits, and use agent-based simulations to explore
how this market's structure evolves as the players learn to cope with the
other players' behaviour.
Robert Marks
Australian Graduate School of Management
www.agsm.edu.au/~bobm
bobm@agsm.edu.au
David Midgley
INSEAD
David.MIDGLEY@insead.edu