How and Why Identical Goods Are
Priced Differently: Sim Lim Square
         – A Case Study
     Melissa Lorraine Chua Jiali...
How and Why Identical Goods Are
Priced Differently: Sim Lim Square
         – A Case Study
     Melissa Lorraine Chua Jiali...
Introduction


• We spend a lot of our time on our
  computers
• Fast changing technology
• We want to help you make bette...
Price Detectives
• We went down to Sim
  Lim Square disguised
  as computer shoppers
• Formed a shopping
  list
• Asked 3 ...
Findings
Limitations
Market structure


Expected to be perfect competition

Anomaly: Charging different prices

Bundling products

Distance fro...
Why we used the Bertrand Model to
    understand shops’ pricing



Goods involved are identical,
homogeneous

Shops have d...
The Bertrand Model of shops
                 P1 & P2 = Prices of 2 shops



                 45 degree line = Prices in
  ...
Implications from our study



Shops are not in collusion (They sell
at different prices)
Different prices imply that they...
Search Theory

We only search for a lower price
when the expected average benefit
(saving) is more than the cost.
Costs of ...
And So...
Conclusion
Conclusion
 If you want to buy cheaper
products from Sim Lim Square,
        go to shops
Conclusion
 If you want to buy cheaper
products from Sim Lim Square,
        go to shops
   further away from
      the el...
Thank
 You
Q&A
How and Why Identical Goods Are Priced Differently—Sim Lim Square—A Case Study
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How and Why Identical Goods Are Priced Differently—Sim Lim Square—A Case Study

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How and Why Identical Goods Are Priced Differently—Sim Lim Square—A Case Study

  1. 1. How and Why Identical Goods Are Priced Differently: Sim Lim Square – A Case Study Melissa Lorraine Chua Jialing Goh Shou Xian Goh Yong Min Charlene Soh Yan Ling Joshua Wong Weng Yew Vincent Fu Jing Cai (MIA)
  2. 2. How and Why Identical Goods Are Priced Differently: Sim Lim Square – A Case Study Melissa Lorraine Chua Jialing Goh Shou Xian Goh Yong Min Charlene Soh Yan Ling Joshua Wong Weng Yew Vincent Fu Jing Cai (MIA)
  3. 3. Introduction • We spend a lot of our time on our computers • Fast changing technology • We want to help you make better buying decisions when you shop for computers
  4. 4. Price Detectives • We went down to Sim Lim Square disguised as computer shoppers • Formed a shopping list • Asked 3 shops on each of the two levels selling computers (4 & 5) for their prices
  5. 5. Findings
  6. 6. Limitations
  7. 7. Market structure Expected to be perfect competition Anomaly: Charging different prices Bundling products Distance from elevators
  8. 8. Why we used the Bertrand Model to understand shops’ pricing Goods involved are identical, homogeneous Shops have different prices and compete solely on prices
  9. 9. The Bertrand Model of shops P1 & P2 = Prices of 2 shops 45 degree line = Prices in which 2 shops are equal P1(P2) = Reaction function of Shop 1
  10. 10. Implications from our study Shops are not in collusion (They sell at different prices) Different prices imply that they are in a process of lowering prices Consumers may have imperfect information on prices
  11. 11. Search Theory We only search for a lower price when the expected average benefit (saving) is more than the cost. Costs of searching Benefits of searching Firms nearer the elevators know this…
  12. 12. And So...
  13. 13. Conclusion
  14. 14. Conclusion If you want to buy cheaper products from Sim Lim Square, go to shops
  15. 15. Conclusion If you want to buy cheaper products from Sim Lim Square, go to shops further away from the elevators.
  16. 16. Thank You Q&A

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