PhD Oral Exam - Saman Asvadi, Business Administration

When studying for a doctoral degree (PhD), candidates submit a thesis that provides a critical review of the current state of knowledge of the thesis subject as well as the student’s own contributions to the subject. The distinguishing criterion of doctoral graduate research is a significant and original contribution to knowledge.

Once accepted, the candidate presents the thesis orally. This oral exam is open to the public.

Abstract

This thesis investigates how customer heterogeneity influences strategic decisions in location-pricing problems within a duopoly setting. The market is modeled as a linear Hotelling line, where two competing retailers must determine their optimal location, pricing, and service strategies. Customers are divided into two segments—premium and economy—each with distinct preferences and reservation prices, capturing market heterogeneity.

Two market entry structures are considered: simultaneous and sequential. In the simultaneous case, interactions are modeled using a Bertrand game; in the sequential case, a Stackelberg game framework is employed. Multiple models are developed to explore how different customer distributions and entry timings affect equilibrium outcomes.

The analysis reveals that customer heterogeneity significantly alters optimal decisions. Retailers facing a heterogeneous market adopt different pricing, location, and service strategies compared to homogeneous settings. Furthermore, the spatial distribution of customers plays a critical role. When customers are uniformly distributed, firms tend to differentiate in location while converging on pricing and service levels. In contrast, non-uniform distributions lead to convergence across all strategic dimensions.

The study also finds that in sequential entry scenarios, the follower may achieve higher profits by offering superior service, especially in uniform markets. However, this advantage diminishes when customer distribution is non-uniform. The results underscore the importance of incorporating customer heterogeneity and spatial variation in analytical models, offering theoretical insights and managerial implications for retail competition in diverse markets.