This paper analyses the evolution of trading relationships in a market in which trades take place bilaterally. Buyers reinforce their probability of visiting sellers as a function of the profitability of their past experience. Using the "mean field" approach it is shown that two distant types of behaviour "loyalist" and "shopper" emerge and that the transition from one to the other is abrupt. These results are confirmed by simulations of more complicated versions of the model.
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Paper provided by Universite Aix-Marseille III in its series G.R.E.Q.A.M. with number
98a32.
Length: 33 pages Date of creation: 1998 Date of revision: Handle: RePEc:fth:aixmeq:98a32
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Find related papers by JEL classification: D4 - Microeconomics - - Market Structure and Pricing L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure Q22 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Fishery
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