A Simple Model of Equilibrium Price Dispersion
Bibliographic Data
| ID | 10174271 |
|---|---|
| Authors | Jennifer F Reinganum (corresponding author) |
| Year | 1979 |
| Volume | 87 |
| Issue | 4 |
| Pages | 851-858 |
| Publication date | 1979-08-01 |
| Peer Reviewed | Yes |
| Open Access | No |
| Type | ARTICLE |
| Venue | Journal of Political Economy (JOURNAL) |
| Journal identifiers | ISSN: 0022-3808 • E-ISSN: 1537-534X |
| Publisher | University of Chicago Press (PUBLISHER • US) |
| DOI | 10.1086/260796 |
| OpenAlex | W1983015749 |
| Language | EN |
| Citations received | 23 |
| References cited | 2 |
This paper demonstrates that price dispersion can exist even within the context of a very simple model. Identical buyers with elastic demand curves sample sequentially from a known price distribution, at a fixed cost per observation. Firms are assumed to be perfectly informed of buyers' reservation prices and demand functions. Given the firms' distribution of marginal costs, firms' behavior as monopolistic competitors results in their offering a distribution of prices which is consistent with expected utility maximization by buyers and with expected profit maximization by sellers
Competitor analysis · Context (archaeology · Demand curve · Distribution (mathematics · Econometrics · Economics · Marginal cost · Mathematical economics · Maximization · Microeconomics · Monopolistic competition · Monopoly · Price dispersion · Profit (economics · Profit maximization · Reservation price · Simple (philosophy · Utility maximization · Consumer Market Behavior and Pricing · Economic theories and models · Mathematics · Merger and Competition Analysis
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| Unique citing works | 23 |
|---|---|
| Citations per year | 0,53 |
| Citation span | 1983 - 2025 (43) |
| Citation velocity | recent |
| Highly cited | No |
| Citation types | Neutral: 21 |