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Consumers and Competition

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Author Info

  • Waterson, Michael

    (Department of Economics, University of Warwick)

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/2008/twerp679.pdf
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Bibliographic 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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Web page: http://www2.warwick.ac.uk/fac/soc/economics/
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Related research

Keywords: Diamond Paradox ; Search Behaviour ; Oligopoly pricing;

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References

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  1. Domberger, Simon & Sherr, Avrom, 1989. "The impact of competition on pricing and quality of legal services," International Review of Law and Economics, Elsevier, Elsevier, vol. 9(1), pages 41-56, June.
  2. Diamond, Peter A., 1971. "A model of price adjustment," Journal of Economic Theory, Elsevier, Elsevier, vol. 3(2), pages 156-168, June.
  3. Rees, Ray, 1993. "Collusive Equilibrium in the Great Salt Duopoly," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 103(419), pages 833-48, July.
  4. Rees, Ray, 1993. "Collusive Equilibrium in the Great Salt Duopoly," Munich Reprints in Economics, University of Munich, Department of Economics 3413, University of Munich, Department of Economics.
  5. Anderson, S.P. & Renault, R., 1997. "Pricing, Product Diversity and Search Costs: A Bertrand-Chamberlin-Diamond Model," Papers, Toulouse - GREMAQ 97.481, Toulouse - GREMAQ.
  6. Hehenkamp, Burkhard, 2002. "Sluggish Consumers: An Evolutionary Solution to the Bertrand Paradox," Games and Economic Behavior, Elsevier, Elsevier, vol. 40(1), pages 44-76, July.
  7. Stahl, Dale O, II, 1989. "Oligopolistic Pricing with Sequential Consumer Search," American Economic Review, American Economic Association, American Economic Association, vol. 79(4), pages 700-712, September.
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Citations

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Cited by:
  1. Lach, Saul & Moraga-González, José-Luis, 2009. "Asymmetric Price Effects of Competition," CEPR Discussion Papers, C.E.P.R. Discussion Papers 7319, C.E.P.R. Discussion Papers.
  2. Giovanni B. Ramello & Donatella Porrini, 2004. "Competition in Banking: Switching Costs and the Limits of Antitrust Enforcement," LIUC Papers in Economics, Cattaneo University (LIUC) 153, Cattaneo University (LIUC).
  3. Emanuele Giovanetti, 2005. "Diagonal mergers and foreclosure in the internet," Working Papers, University of Rome La Sapienza, Department of Public Economics 80, University of Rome La Sapienza, Department of Public Economics.
  4. Waterson, Michael, 2003. "The role of consumers in competition and competition policy," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 21(2), pages 129-150, February.

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