Commitment's impacts on product-supplementary service market with information asymmetry

We investigate the impacts of commitment to the product-supplementary service (PSS) level in a Bertrand competition market with information asymmetry. Firm's commitment to the PSS level leads to changes in the market structure, in which new Bertrand equilibrium be reached. It is show that firm's commitment action is determined by the distribution interval of PSS level and customer's taste of PSS, which is beneficial to both consumer and firm from the view of social welfare. Furthermore the dominant firm always is the leader to offer commitment that is maximized as possible as it can.