Price competition during and after promotions

Simon Pierre Sigué, Salma Karray

Research output: Contribution to journalJournal Articlepeer-review

7 Citations (Scopus)


We provide a framework for setting regular prices and using promotional discounts in a duopoly where long-term promotional effects are present and the firms' pricing and promotional strategies are common knowledge (e.g., as in online markets). We show that at equilibrium, the two firms may not promote and instead adopt an Everyday Low Price (EDLP) strategy. Consumers' tendency to stockpile promoted products, the level of brand loyalty and product differentiation, and the possibility of a postpromotional sales increase critically influence regular prices, price discount rates, and profits. Under some conditions consumer stockpiling intensifies promotional competition and reduces firms' profits while the possibility of attracting new consumers reduces the need to heavily promote and ensures better profits. Managerial implications are discussed.

Original languageEnglish
Pages (from-to)80-93
Number of pages14
JournalCanadian Journal of Administrative Sciences
Issue number2
Publication statusPublished - Jun. 2007


  • Competition
  • Duopoly
  • Game theory
  • Pricing
  • Promotions


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