In terms of price evolution we recognize that non monotonic strategies occur

In terms of price evolution we recognize that non

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dium-price and high-price segments. In terms of price evolution, we recognize that non- monotonic strategies occur less frequently than monotonic strategies across all segments. The dominant pattern is a monotonic nonlinear price decrease as Figure 1 shows. Although relative prices generally decrease (70% of all cameras) we also observe that 26% of cameras have relative price increases, albeit many of them towards the end of their life cycle (see pattern 9 in Figure 1). We also compared the evolution patterns in Figure 1 with evolution patterns obtained from fitting a quadratic time function to observed absolute retail prices. Note that these prices also incorporate changes in static Nash prices due to evolving cost and demand conditions, which are controlled for in our conceptualization. In addition, differences may occur because of uncer- tainties surrounding the shape parameter estimates. Overall, we find identical strategy types for
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25 478 cameras corresponding to a 72% hit rate. We conclude that our conduct parameter-based ap- proach of relative price evolution is not artificial but reflects well observed retail prices. == Insert Table 6 here == Descriptors of Strategy Choice Table 6 reveals a quite heterogeneous choice of dynamic pricing strategies across firms, cameras, and segments. Skimming and penetration strategies are in balance, which seems to re- flect the fuzziness in textbook recommendations. To better understand the factors and conditions associated with the choice of a skimming over a penetration strategy, we estimate a binomial pro- bit model. Note that this is a descriptive analysis. We do not intend to establish causal relation- ships between the analyzed variables and strategy choice. The dynamic pricing strategy is as- sumed to be endogenously generated from dynamic competitive firm interactions. Table 7 shows the results of our descriptive analysis. We analyze the role of seven firm- level descriptors and two market-level descriptors. At the firm level, we consider a dummy vari- able of firm entry before year 2000 , the launch date of the camera, the distribution strength of the brand (measured by the focal camera’s average weighted distribution), a dummy variable that classifies the (umbrella) brand as established manufacturer in consumer electronics/photography or not, the breadth of product line (measured by a brand’s average number of cameras over the focal camera’s life cycle), the length of the camera ’s life cycle , and the cumulated manufacturer sales at launch of the focal camera. At the market level, we consider the competitive intensity in the segment (measured by the average Herfindahl index over the focal camera’s life cycle) and a dummy variable that measures whether the camera was launched in the low-price segment or not.
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