Price Strategies in a Vertically Differentiated Mutual Fund Market

21 Pages Posted: 1 Oct 2012

Date Written: June 7, 2012

Abstract

Several empirical studies show that mutual funds set their prices in a strategic way according to their level of quality. In a market where two mutual funds are vertically differentiated, we study their price strategies in cases of perfect information and when investors are unable to distinguish the type of fund. Our results show that mutual funds prefer to set their price sequentially and that they are indifferent to be the first or the second mover. Additionally, the presence of a lower quality mutual fund compels both mutual funds to set lower prices for low levels quality differences between them.

Suggested Citation

Lemeunier, Sebastien Michel, Price Strategies in a Vertically Differentiated Mutual Fund Market (June 7, 2012). 29th International Conference of the French Finance Association (AFFI) 2012. Available at SSRN: https://ssrn.com/abstract=2083605 or http://dx.doi.org/10.2139/ssrn.2083605

Sebastien Michel Lemeunier (Contact Author)

European Business School Paris ( email )

37/39 Boulevard Murat
Paris, 75016
France

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