Essays on advance selling of new to-be-released products
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This dissertation comprises three essays on the same topic: advance selling of new to-be-released products. The first essay studies the retailer's optimal strategy in a model where the demand uncertainty comes from both the market size and the distribution of consumers' valuations. I find that there are three types of advance selling strategies: advance selling at a deep discount, advance selling at a moderate discount and no advance selling. I also characterize the conditions under which the retailer adopts advance selling and perform comparative statics analysis. The second essay studies the retailer's optimal advance selling strategy in a model with the presence of experienced consumers. We divide consumers into two groups, experienced and inexperienced. Pre-orders from experienced consumers lead to a more precise forecast of future demand by the firm. We show that the firm will always adopt advance selling and that the optimal pre-order price may or may not be at a discount to the regular selling price. The third essay investigates advance selling at a price premium. I show that advance selling at a price premium always yields more profit for the retailer compared with advance selling at the regular selling price. In addition, I analyze conditions under which the retailer is more likely to implement advance selling at a price premium instead of a price discount. Sensitivity analysis is also presented to show how the retailer's optimal advance selling price premium and optimal total profit are affected by some important parameters in the model.
2012 Freely available dissertations (MU)