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Price dispersion in pure strategies

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  • Kozin, Georgii
  • Suzdaltsev, Alex

Abstract

We revisit Anderson and de Palma (2005)’s model of firm pricing when searching consumers follow simple reservation price rules. In this model, any pure-strategy equilibrium, if exists, features different prices set by identical firms, i.e., price dispersion may arise without randomization. However, the existence of such an equilibrium has not been established beyond simple examples as profit functions in this model are naturally not quasiconcave. We show that in a duopoly a (dispersed) pure-strategy equilibrium always exists—despite the non-quasiconcavity—under any reservation price distribution with monotone hazard rate. This may help explain persistent price dispersion.

Suggested Citation

  • Kozin, Georgii & Suzdaltsev, Alex, 2026. "Price dispersion in pure strategies," Economics Letters, Elsevier, vol. 258(C).
    • Handle: RePEc:eee:ecolet:v:258:y:2026:i:c:s0165176525005798
    DOI: 10.1016/j.econlet.2025.112742
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    References listed on IDEAS

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