Journal of Political Economy Vol. 91 No. 3 1983
Discrete Equilibrium Price Dispersion
Abstract
An explicit solution of an equilibrium model with price-setting firms and searching customers makes possible a number of comparative-statics predictions about how cost differences among firms, search costs of customers, and taxes will affect the mean and variance of the distribution of market prices. Another implication of the model is that a firm's demand depends on the difference between its price and the average price in the market.
- DOI
- 10.1086/261159
- Volume
- 91
- Issue
- 3
- Pages
- 480-493
- Language
- en
- Sources
- openalex crossref