Essays on pricing strategies in retailing markets

The propose of this dissertation is to build models that represent economics environments in a framework of game theory such that the equilibrium solution for prices that the firms set, given the optimal strategies of consumers, explain the patterns of prices experienced currently by retailing markets.; This research proposes several models in which the consumers optimize, for given prices, their utility function to choose their search strategy. These models link market structure, consumer characteristics and imperfect information to the nature of HI-LO pricing strategy. It allows to explore different forms of price discounting, such as a temporary reduction in price in a high-low format (HI-LO) in which retailers charge high prices and run frequent promotions on some periods. And (EDLP) in which the retailers charge a constant everyday price with no temporary price discounts. The model explains why High-Low and Everyday low Price persists and analyzes which retail price format is more profitable. It also discusses how the average prices of items in HI-LO stores should be set relative to those in EDLP stores.; The model helps to characterize the price patterns in each strategy according to the set of actions and allows to explain why some strategies are strictly dominated and why others strategies are equilibria. The model answers why the transition to EDLP is not necessarily an improving strategy. It shows that the distribution of consumers who buy at random plays an important role in determining whether or not firms will find it optimal to use price promotions (High-Low pricing strategy). The equilibrium is a unique Perfect Nash Equilibrium in a finitely repeated game. The model is generalized by considering the implications when firms decide simultaneously to play prices and level of service. It is extended to analyze the implications when consumers are not distributed uniformly.