Icon

MS-173 Bertrand Competition with Search Costs v05

[Market Simulation] MS-173 Bertrand Competition with Search Costs
Market Simulation (MS-173) - Bertrand Competition with Search CostsExplores another variation of Bertrand Competition. The Products in thisMarket are, again, undifferentiated Commodity Products. But in this case,there are Search Costs that limit Customer awareness of each Product. The Price Experiment loop willtest changing both the Spacelyand Cogswell Prices up anddown (while keeping theCompetitor's Price constant). Compare all of the Spacely Price Changes: (a)Raise Price, (b) Maintain Same Price, (c) LowerPrice. Then select the Price that maximizes short-term Profit (assuming the Competitor does notchange Price). Compare all of the Cogswell Price Changes: (a)Raise Price, (b) Maintain Same Price, (c) LowerPrice. Then select the Price that maximizes short-term Profit (assuming the Competitor does notchange Price). Collect together the new Priceschosen by both Competitors.These new Prices will bepassed back to the Loop Start. Only 20% chance the Customeris aware of both Products. There may exist no pure-strategyNash Equilibrium, but SearchCosts (as long as they arepervasive) help ensure thatProfits exist. Competitors each try raisingPrice to increase Profitabilityexpecting that the otherCompetitor will maintain Price. Prices are not driven down toMarginal Cost when there areSearch Costs and Competitorsoften are not aware of all theirchoices.CompetitiveRivalsWillingnessTo Pay (WTP)of CustomersProductArrayProductArraySummaryDefine:Spacely_PriceSpacely_CostCogswell_PriceCogswell_CostPrice_Change_PercentagePrice ExperimentLoop StartSet ProductCostsSet ProductPrice(No Change)Set ProductPrice(Raise Spacely)Set ProductPrice(Decrease Spacely)Set ProductPrice(Decrease Cogswell)Set ProductPrice(Raise Cogswell)WillingnessTo Pay (WTP)of CustomersRun PriceExperiment #1Run PriceExperiment #2Run PriceExperiment #3Run PriceExperiment #4Run PriceExperiment #5Spacely ResultsSpacely ResultsNo SaleResultsCogswell ResultsCogswell ResultsSpacely ResultsCogswell ResultsSort byMaximum ProfitSort byMaximum ProfitSelectMaximum ProfitSelectMaximum ProfitSelect NewSpacely_PriceSelect NewCogswell_PriceRename NewSpacely_PriceSpacely_CostRename NewCogswell_PriceCogswell_CostPrice_ChangePercentagePrice ExperimentLoop End30 x IterationsTrack ExpectedResultsSpacely ResultsCogswell ResultsSpacely ResultsCogswell ResultsActualPrice TrendExpectedQuantity TrendExpectedRevenue TrendExpectedProfit TrendIntroduceSearch Costs40% = Spacely Sprockets40% = Cogswell Cogs20% = Aware of BothSpacely ResultsCogswell ResultsSpacely_PriceSpacely_CostCogswell_PriceCogswell_CostAll Spacely Results:(a) Increase Price(b) Same Price(c) Decrease PriceAll Cogswell Results:(a) Increase Price(b) Same Price(c) Decrease PriceConvert Price / Costto Flow Variables Table Creator CustomerDistributions Product Generator Column Filter Table Creator RecursiveLoop Start Java Snippet Java Snippet Java Snippet Java Snippet Java Snippet Java Snippet Column Filter Simulate Market Simulate Market Simulate Market Simulate Market Simulate Market Row Splitter Row Splitter Row Splitter Row Splitter Row Splitter Row Splitter Sorter Sorter Row Filter Row Filter Column Filter Column Filter Column Rename Column Rename ConstantValue Column Recursive Loop End Concatenate Row Splitter Column Rename(Regex) Column Rename(Regex) Line Chart(JFreeChart) Line Chart(JFreeChart) Line Chart(JFreeChart) Line Chart(JFreeChart) Demand Shredder GroupBy Column Appender Column Appender Concatenate Concatenate Table Rowto Variable Market Simulation (MS-173) - Bertrand Competition with Search CostsExplores another variation of Bertrand Competition. The Products in thisMarket are, again, undifferentiated Commodity Products. But in this case,there are Search Costs that limit Customer awareness of each Product. The Price Experiment loop willtest changing both the Spacelyand Cogswell Prices up anddown (while keeping theCompetitor's Price constant). Compare all of the Spacely Price Changes: (a)Raise Price, (b) Maintain Same Price, (c) LowerPrice. Then select the Price that maximizes short-term Profit (assuming the Competitor does notchange Price). Compare all of the Cogswell Price Changes: (a)Raise Price, (b) Maintain Same Price, (c) LowerPrice. Then select the Price that maximizes short-term Profit (assuming the Competitor does notchange Price). Collect together the new Priceschosen by both Competitors.These new Prices will bepassed back to the Loop Start. Only 20% chance the Customeris aware of both Products. There may exist no pure-strategyNash Equilibrium, but SearchCosts (as long as they arepervasive) help ensure thatProfits exist. Competitors each try raisingPrice to increase Profitabilityexpecting that the otherCompetitor will maintain Price. Prices are not driven down toMarginal Cost when there areSearch Costs and Competitorsoften are not aware of all theirchoices.CompetitiveRivalsWillingnessTo Pay (WTP)of CustomersProductArrayProductArraySummaryDefine:Spacely_PriceSpacely_CostCogswell_PriceCogswell_CostPrice_Change_PercentagePrice ExperimentLoop StartSet ProductCostsSet ProductPrice(No Change)Set ProductPrice(Raise Spacely)Set ProductPrice(Decrease Spacely)Set ProductPrice(Decrease Cogswell)Set ProductPrice(Raise Cogswell)WillingnessTo Pay (WTP)of CustomersRun PriceExperiment #1Run PriceExperiment #2Run PriceExperiment #3Run PriceExperiment #4Run PriceExperiment #5Spacely ResultsSpacely ResultsNo SaleResultsCogswell ResultsCogswell ResultsSpacely ResultsCogswell ResultsSort byMaximum ProfitSort byMaximum ProfitSelectMaximum ProfitSelectMaximum ProfitSelect NewSpacely_PriceSelect NewCogswell_PriceRename NewSpacely_PriceSpacely_CostRename NewCogswell_PriceCogswell_CostPrice_ChangePercentagePrice ExperimentLoop End30 x IterationsTrack ExpectedResultsSpacely ResultsCogswell ResultsSpacely ResultsCogswell ResultsActualPrice TrendExpectedQuantity TrendExpectedRevenue TrendExpectedProfit TrendIntroduceSearch Costs40% = Spacely Sprockets40% = Cogswell Cogs20% = Aware of BothSpacely ResultsCogswell ResultsSpacely_PriceSpacely_CostCogswell_PriceCogswell_CostAll Spacely Results:(a) Increase Price(b) Same Price(c) Decrease PriceAll Cogswell Results:(a) Increase Price(b) Same Price(c) Decrease PriceConvert Price / Costto Flow VariablesTable Creator CustomerDistributions Product Generator Column Filter Table Creator RecursiveLoop Start Java Snippet Java Snippet Java Snippet Java Snippet Java Snippet Java Snippet Column Filter Simulate Market Simulate Market Simulate Market Simulate Market Simulate Market Row Splitter Row Splitter Row Splitter Row Splitter Row Splitter Row Splitter Sorter Sorter Row Filter Row Filter Column Filter Column Filter Column Rename Column Rename ConstantValue Column Recursive Loop End Concatenate Row Splitter Column Rename(Regex) Column Rename(Regex) Line Chart(JFreeChart) Line Chart(JFreeChart) Line Chart(JFreeChart) Line Chart(JFreeChart) Demand Shredder GroupBy Column Appender Column Appender Concatenate Concatenate Table Rowto Variable

Nodes

Extensions

Links

Download

To use this workflow in KNIME, download it from the below URL and open it in KNIME:

Download Workflow
Created by: Berlin
Created at: 2018-10-18
On NodePit since: 2021-02-05
Last update: 2024-12-17
Created with KNIME version: v4.3.0

Deploy, schedule, execute, and monitor your KNIME workflows locally, in the cloud or on-premises – with our brand new NodePit Runner.

Try NodePit Runner!