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Price distributions and competition

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  • Kenneth Burdett
  • Eric Smith

Abstract

Considerable evidence demonstrates that significant dispersion exists in the prices charged for seemingly homogeneous goods. This paper adopts a simple, flexible equilibrium model of search to investigate the way the market structure influences price dispersion. Using the noisy search approach, the paper demonstrates the effects of having a single large, price-leading firm with multiple outlets and a competitive fringe of small firms with one retail outlet each.

Suggested Citation

  • Kenneth Burdett & Eric Smith, 2009. "Price distributions and competition," FRB Atlanta Working Paper 2009-27, Federal Reserve Bank of Atlanta.
  • Handle: RePEc:fip:fedawp:2009-27
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    References listed on IDEAS

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    Cited by:

    1. Nermuth, Manfred & Pasini, Giacomo & Pin, Paolo & Weidenholzer, Simon, 2013. "The informational divide," Games and Economic Behavior, Elsevier, vol. 78(C), pages 21-30.
    2. Obradovits, Martin, 2017. "Search and segregation," International Journal of Industrial Organization, Elsevier, vol. 55(C), pages 137-165.
    3. Obradovits, Martin, 2015. "Going to the Discounter: Consumer Search with Local Market Heterogeneities," MPRA Paper 66613, University Library of Munich, Germany.

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