Edgeworth price cycles
AbstractEdgeworth price cycles refer to an asymmetric pattern of prices that result from a dynamic pricing equilibrium among competing oligopolists. The resulting time series takes on a sawtooth shape – many small price decreases interrupted only by occasional large price increases. Maskin and Tirole (1988) formalized the theory, and later extensions were provided by Eckert (2003) and Noel (2008). Edgeworth price cycles are the leading theory for explaining the asymmetric price cycles that appear in many US, Canadian, Australian and European retail gasoline markets (e.g. Noel (2007a), Eckert (2002), Doyle et al. (2010), Wang (2009b)). While the gasoline cycles continue to generate public concern with claims of collusion often raised, the current evidence favours Edgeworth price cycles being the result of stronger competition and the source of lower retail gasoline prices.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
This chapter was published in: Steven N. Durlauf & Lawrence E. Blume (ed.) , , pages , 2011, 1st quarter update.
This item is provided by Palgrave Macmillan in its series The New Palgrave Dictionary of Economics with number v:5:year:2011:doi:3849.
Contact details of provider:
Web page: http://www.palgrave-journals.com/
Find related papers by JEL classification:
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
- L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Beare, Brendan K. & Seo, Juwon, 2012. "Time irreversible copula-based Markov Models," University of California at San Diego, Economics Working Paper Series qt31f8500p, Department of Economics, UC San Diego.
- David P.Byrne & Roger Ware, 2011. "Price Cycles and Price Leadership in Gasoline Markets: New Evidence from Canada," Department of Economics - Working Papers Series 1124, The University of Melbourne.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sheeja Sanoj).
If references are entirely missing, you can add them using this form.