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Random Encounters and Information Diffusion about Markets

Author

Listed:
  • Jean J. Gabszewicz

    (CORE, Université Catholique de Louvain, Belgium)

  • Marco A. Marini

    (University of Rome La Sapienza and CREI, Italy)

  • Skerdilajda Zanaj

    (CREA, Université du Luxembourg)

Abstract

International openness enhances social interactions between citizens of different countries or regions, and vice versa. Social exchanges in turn increase the trade flows between coun- tries. Accordingly, these meetings influence markets and prices. We analyze the interaction between the increased mobility following openness between two different countries and the corresponding effects on market outcomes. The main result of our analysis consists in show- ing that market prices tend at the limit to align with the duopoly solution. Nonetheless, this convergence can take two different paths depending on the size asymmetry between the countries.

Suggested Citation

  • Jean J. Gabszewicz & Marco A. Marini & Skerdilajda Zanaj, 2017. "Random Encounters and Information Diffusion about Markets," DEM Discussion Paper Series 17-24, Department of Economics at the University of Luxembourg.
    • Handle: RePEc:luc:wpaper:17-24
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    References listed on IDEAS

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    Cited by:

    1. Jean J. Gabszewicz & Marco A. Marini & Skerdilajda Zanaj, 2023. "Random encounters and information diffusion about product quality," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 32(2), pages 348-376, April.
    2. Ceccantoni, Giulia & Tarola, Ornella & Zanaj, Skerdilajda, 2018. "Green Consumption and Relative Preferences in a Vertically Differentiated International Oligopoly," Ecological Economics, Elsevier, vol. 149(C), pages 129-139.
    3. Lu, Xinqing & Zhu, Erpu & Campbell, Loyle & Hafner, Manfred & Noussan, Michel & Raimondi, Pier Paolo, 2021. "Comparison between China, the EU and the US's climate and energy governance: How policies are made and implemented at different levels," FEEM Working Papers 317745, Fondazione Eni Enrico Mattei (FEEM).
    4. Xinqing Lu & Erpu Zhu & Loyle Campbell & Manfred Hafner & Michel Noussan & Pier Paolo Raimondi, 2021. "Comparison between China, the EU and the US’s climate and energy governance: How policies are made and implemented at different levels," Working Papers 2021.34, Fondazione Eni Enrico Mattei.

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    More about this item

    Keywords

    Vertically Differentiated Markets; Information Diffusion; Openness.;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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