Why Do Firms Contrive Shortages? The Economics of Intentional Mispricing
AbstractGiven buyers' product-specific information capital, firms may increase long-run profits by underpricing (rationing) rather than clearing markets when demands or costs rise transitorily. To minimize resulting shortages' costs, sellers predictably would distinguish among customer groups, managing any queues of disappointed loyal buyers that materialized (but largely ignoring transitory buyer queues), and would discourage resale. Unlike other shortage models, short-run excess demand necessarily implies neither buyers who prefer consuming in groups nor waiting costs that are negligible. Any sense of unfair price increases would arise endogenously from sellers' failures to value appropriately customers' otherwise prudent informational investments. Copyright 1994 by Oxford University Press.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoArticle provided by Western Economic Association International in its journal Economic Inquiry.
Volume (Year): 32 (1994)
Issue (Month): 4 (October)
Contact details of provider:
Postal: Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK
Fax: 01865 267 985
Web page: http://ei.oupjournals.org/
More information through EDIRC
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Daniel Levy & Haipeng Allan Chen & Sourav Ray & Mark Bergen, 2004.
"Asymmetric Price Adjustment "in the Small:" An Implication of Rational Inattention,"
0407012, EconWPA, revised 11 May 2005.
- Daniel Levy & Hainpeng (Allan) Chen & Sourav RayAuthor-Name: Mark Bergen, 2004. "Asymmetric Price Adjustment in the Small: An Implication of Rational Inattention," Emory Economics 0408, Department of Economics, Emory University (Atlanta).
- Daniel Levy & Haipeng (Allen) Chang & Sourav Ray & Mark Bergen, 2004. "Asymmetric Price Adjustment in the Small: An Implication of Rational Inattention," Working Papers 04-23, Utrecht School of Economics.
- Daniel Levy & Haipeng (Allan) Chen & Sourav Ray & Mark Bergen, 2004. "Asymmetric Price Adjustment in the Small: An Implication of Rational Inattention," Working Papers 2004-08, Department of Economics, Bar-Ilan University.
- Tabarrok, Alexander, 2008. "The hot-toy problem," Journal of Economic Behavior & Organization, Elsevier, vol. 67(2), pages 512-516, August.
- Henk Folmer & Auke Leen, 2013. "Why do successful restaurants not raise their prices?," Letters in Spatial and Resource Sciences, Springer, vol. 6(2), pages 81-90, July.
- Mark Zbaracki & Mark Bergen & Shantanu Dutta & Daniel Levy & Mark Ritson, 2005.
"Beyond the Cost of Price Adjustment: Investments in Pricing Capital,"
- Mark Zbaracki & Mark Bergen & Daniel Levy & Mark Ritson, 2005. "Beyond the Cost of Price Adjustment: Investments in Pricing Capital," Working Papers 2005-03, Department of Economics, Bar-Ilan University.
- Julio J. Rotemberg, 2004.
NBER Working Papers
10915, National Bureau of Economic Research, Inc.
- Dutta, Shantanu & Bergen, Mark & Levy, Daniel, 2002.
"Price flexibility in channels of distribution: Evidence from scanner data,"
Journal of Economic Dynamics and Control,
Elsevier, vol. 26(11), pages 1845-1900, September.
- Shantanu Dutta & Mark Bergen & Daniel Levy, 2004. "Price Flexibility in Channels of Distribution: Evidence from Scanner Data," Macroeconomics 0402018, EconWPA.
- Shantanu Dutta & Mark Bergen & Daniel Levy, 2002. "Price Flexibility in Channels of Distribution: Evidence from Scanner Data," Working Papers 2002-10, Department of Economics, Bar-Ilan University.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.