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Consumers and Competition

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Author Info
Waterson, Michael (Department of Economics, University of Warwick)

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Abstract

This paper shows that even if all consumers face search costs, if these are below a certain level dependent upon the firm numbers and demand elasticity, the Diamond-type equilibrium with all prices at the monopoly level fails to exist.

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File URL: http://www2.warwick.ac.uk/fac/soc/economics/research/workingpapers/publications/twerp679.pdf
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Publisher Info
Paper provided by University of Warwick, Department of Economics in its series The Warwick Economics Research Paper Series (TWERPS) with number 679.

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Length: 13 pages
Date of creation: 2003
Date of revision:
Handle: RePEc:wrk:warwec:679

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Related research
Keywords: Diamond Paradox ; Search Behaviour ; Oligopoly pricing;

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Find related papers by JEL classification:
D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

References listed on IDEAS
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.:

  1. Hehenkamp, Burkhard, 2002. "Sluggish Consumers: An Evolutionary Solution to the Bertrand Paradox," Games and Economic Behavior, Elsevier, vol. 40(1), pages 44-76, July. [Downloadable!] (restricted)
  2. Diamond, Peter A., 1971. "A model of price adjustment," Journal of Economic Theory, Elsevier, vol. 3(2), pages 156-168, June. [Downloadable!] (restricted)
  3. Domberger, Simon & Sherr, Avrom, 1989. "The impact of competition on pricing and quality of legal services," International Review of Law and Economics, Elsevier, vol. 9(1), pages 41-56, June. [Downloadable!] (restricted)
  4. Rees, Ray, 1993. "Collusive Equilibrium in the Great Salt Duopoly," Economic Journal, Royal Economic Society, vol. 103(419), pages 833-48, July. [Downloadable!] (restricted)
  5. Stahl, Dale O, II, 1989. "Oligopolistic Pricing with Sequential Consumer Search," American Economic Review, American Economic Association, vol. 79(4), pages 700-712, September. [Downloadable!] (restricted)
  6. Anderson, S.P. & Renault, R., 1997. "Pricing, Product Diversity and Search Costs: A Bertrand-Chamberlin-Diamond Model," Papers 97.481, Toulouse - GREMAQ.
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Cited by:
(explanations, 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.)

  1. Giovanni B. Ramello & Donatella Porrini, 2004. "Competition in Banking: Switching Costs and the Limits of Antitrust Enforcement," LIUC Papers in Economics 153, Cattaneo University (LIUC). [Downloadable!]
  2. Waterson, Michael, 2001. "The role of consumers in competition and competition policy," The Warwick Economics Research Paper Series (TWERPS) 607, University of Warwick, Department of Economics. [Downloadable!]
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This page was last updated on 2009-11-25.

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