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Price Setting and Competition in a Simple Duopoly Model

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  • Gale, Douglas

Abstract

This paper studies a market in which there are two sellers and one buyer. Each agent wants to trade, at most, one unit of an indivisible commodity. The sellers are uncertain whether the buyer is receiving offers from one or both of them at any given time. This model induce s competitive and monopolistic outcomes for particular parameter values. But, other things being equal, as the buyer becomes very patient, the equilibrium price converges to the competitive one. Copyright 1988, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Bibliographic Info

Article provided by MIT Press in its journal Quarterly Journal of Economics.

Volume (Year): 103 (1988)
Issue (Month): 4 (November)
Pages: 729-39

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Handle: RePEc:tpr:qjecon:v:103:y:1988:i:4:p:729-39

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Web page: http://mitpress.mit.edu/journals/

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Cited by:
  1. Mitsutoshi M. Adachi, 1998. "A note on frictions in the Bazaar type bargaining game," Investigaciones Economicas, FundaciĆ³n SEPI, vol. 22(2), pages 293-304, May.
  2. Bester, H., 1991. "Bargaining vs. price competition in a market with quality uncertainty," Discussion Paper 1991-13, Tilburg University, Center for Economic Research.
  3. Timothy N. Cason & Shakun Datta, 2008. "Costly Buyer Search in Laboratory Markets with Seller Advertising," Purdue University Economics Working Papers 1212, Purdue University, Department of Economics.
  4. Gianni De Fraja & Jozsef Sakovics, 2004. "Walras Retrouve: Decentralized Trading Mechanisms and the Competitive Price," ESE Discussion Papers 36, Edinburgh School of Economics, University of Edinburgh.

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