Price dispersion in duopolies with heterogeneous consumers
AbstractIn this paper, I modify Varian's [Varian, H.R. (1980). A model of sales, American Economic Review, 70(4), 651-659] model of sales to allow for heterogeneity in consumer preferences. I show that in mixed strategy equilibria each firm charges a finite number of prices. Using this characterization, I examine the effect of consumer heterogeneity on firms' optimal pricing strategies.
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Bibliographic InfoArticle provided by Elsevier in its journal International Journal of Industrial Organization.
Volume (Year): 27 (2009)
Issue (Month): 2 (March)
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Price dispersion Mixed equilibrium Heterogeneous consumers;
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