Author(s)

Xinlan Ye¹, Zhenzhong Guan^1*, Miao Ouyang²

¹School of Economics and Management, Southwest Jiaotong University, Chengdu, China.
²School of Mathematics, Southwest Jiaotong University, Chengdu, China.

This article mainly considers the impact of cost reduction on price matching strategy when a firm sells products in two periods. The cost reduction in the second period is due to technological advancement and production learning. The market is made up of myopic consumers and strategic consumers. The conclusions show that firm’s optimal profit will decrease with the increase of the fraction of strategic consumers. Besides, when the production learning effect dominates, the firm sells at a reduced price in two periods. When the technological advancement effect dominates, the firm maintains a uniform price for sale throughout the sales period. Finally, both the technological advancement and production learning effect can effectively reduce the loss of profits caused by strategic consumers, and the effect of the technological advancement is more significant.

Strategic Consumer, Price Matching, Cost Reduction, Technological Advancement, Production Learning

Ye, X. , Guan, Z. and Ouyang, M. (2020) The Impact of Cost Reduction on Price Matching Strategy in the Presence of Hybrid Consumers. Journal of Mathematical Finance, 10, 77-95. doi: 10.4236/jmf.2020.101007.