Dynamic Game Of Vertical Differentiation Model

Product pricing is the basis of market economy, also the core scopes of economic theory. This dissertation studies how enterprises set price on their products and product quality. First of all, the author gives general concept, aim and condition of product pricing, the common pricing theory and methods of oligarch enterprises. Then investigates two kinds of asymmetric product pricing based on the above hypothesis: product pricing under cost asymmetrical enterprises and product locating when consumers have less information about product quality than enterprises.This paper sets up vertical differentiation model and discusses product selection, product pricing under full information and selection of competition strategy between enterprises. Then the author gives static game and dynamic game analysis under cost asymmetrical enterprises to conclude optimal competition strategy.And finally, studies the main reason of domestic mobile phone's win-loss by positive way.The paper finally gets the following conclusions:①Whether cost-advantage company takes low price competition strategy or acquiescent strategy, cost-disadvantage company will take strategy to make improvement to its product quality.②When consumers have asymmetric information about product quality, market equilibrium depends on: less consumer's externalities, less product quality difference, and more laymen on the very market.This article's main innovation lies in:Firstly, using the method of data simulation, we analyze the total cost factor how to influence the enterprise product choosing and pricing.Secondly, consider the factor of consumer externality that the layman purchase high price, low quality product, which will engender adverse effects to other consumers,we carry on the data imitates analysis of information asymmetry.