Dynamic pricing of electronic products with consumer reviews

In the extensions, we propose a tractable and flexible framework to support both operational and strategic decision-making processes. We explore the value of persuasive advertisement, and the results suggest that consumer reviews and marketing efforts are strategic substitutes. In terms of quality control, we find that it would be optimal to invest in quality in the early stages, but stop at a certain time threshold, resulting in a reputation-building and reputation-spending pattern. Finally, we extend the framework to study a duopoly pricing problem. We show that the high-quality seller could strategically accommodate the low-quality seller in the early stages, and wages a price war at later stages.