Nonsequential Search Equilibrium with Search Cost Heterogeneity
AbstractWe generalize the model of Burdett and Judd (1983) to the case where an arbitrary finite number of firms sells a homogeneous good to buyers who have heterogeneous search costs. We show that a price dispersed symmetric Nash equilibrium always exists. Numerical results show that the behavior of prices with respect to the number of firms hinges upon the shape of the search cost distribution: when search costs are relatively concentrated (dispersed), entry of firms leads to higher (lower) average prices.
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Bibliographic InfoPaper provided by Indiana University, Kelley School of Business, Department of Business Economics and Public Policy in its series Working Papers with number 2010-11.
Date of creation: Jun 2010
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More information through EDIRC
nonsequential search; oligopoly; arbitrary search cost distributions;
Other versions of this item:
- Moraga-Gonzalez, Jose L. & Sandor, Zsolt & Wildenbees, Matthijs R., 2010. "Nonsequential search equilibrium with search cost heterogeneity," IESE Research Papers D/869, IESE Business School.
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-09-18 (All new papers)
- NEP-CMP-2010-09-18 (Computational Economics)
- NEP-COM-2010-09-18 (Industrial Competition)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jose Luis Moraga-Gonzalez & Matthijs R. Wildenbeest, 0000.
"Maximum Likelihood Estimation of Search Costs,"
Tinbergen Institute Discussion Papers
06-019/1, Tinbergen Institute.
- Lach, Saul & Moraga, Jose L., 2009.
"Asymmetric price effects of competition,"
IESE Research Papers
D/797, IESE Business School.
- Saul Lach & Jose Luis Moraga-Gonzalez, 2009. "Asymmetric Price Effects of Competition," Tinbergen Institute Discussion Papers 09-049/2, Tinbergen Institute.
- Lach, Saul & Moraga-González, José-Luis, 2009. "Asymmetric Price Effects of Competition," CEPR Discussion Papers 7319, C.E.P.R. Discussion Papers.
- Babur De los Santos & In Kyung Kim & Dmitry Lubensky, 2013. "Do MSRPs Decrease Prices?," Working Papers 2013-13, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
- Jose Luis Moraga-Gonzalez & Zsolt Sandor & Matthijs R. Wildenbeest, . "Do higher search costs make the markets less competitive?," Working Papers 2013-08, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
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