Pricing, Product Diversity and Search Costs: A Bertrand-Chamberlin-Diamond Model
Bertrand argued that price would be driven down to marginal cost even with only two firms in the market. Chamberlin, by introducing product differentiation, argued that price will exceed marginal cost even when there are many firms. Thus product differentiation resolves the "Bertrand Paradox". Diamond argued that firms would set monopoly prices in the Bertrand context if consumers face search costs.
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- Raymond Deneckere & Michael Rothschild, 1992. "Monopolistic Competition and Preference Diversity," Review of Economic Studies, Oxford University Press, vol. 59(2), pages 361-373.
- Simon P. Anderson & Regis Renault, 1997.
"Consumer Information and Firm Pricing: Negative Externalities from Improved Information,"
Virginia Economics Online Papers
338, University of Virginia, Department of Economics.
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- Diamond, Peter A., 1971. "A model of price adjustment," Journal of Economic Theory, Elsevier, vol. 3(2), pages 156-168, June.
- Jeffrey M. Perloff & Steven C. Salop, 1985.
"Equilibrium with Product Differentiation,"
Review of Economic Studies,
Oxford University Press, vol. 52(1), pages 107-120.
- Perloff, Jeffrey M & Salop, Steven, 1984. "Equilibrium with product differentiation," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt4cq0m6s3, Department of Agricultural & Resource Economics, UC Berkeley.
- Kohn, Meir G. & Shavell, Steven, 1974. "The theory of search," Journal of Economic Theory, Elsevier, vol. 9(2), pages 93-123, October.
- ANDERSON, Simon P. & DE PALMA, André & NESTEROV, Yurii, 1994.
"Oligopolistic Competition and the Optimal Provision of Products,"
CORE Discussion Papers
1994034, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Anderson, Simon P & de Palma, Andre & Nesterov, Yurii, 1995. "Oligopolistic Competition and the Optimal Provision of Products," Econometrica, Econometric Society, vol. 63(6), pages 1281-1301, November.
- Anderson, S. P. & De Palma, A. & Nesterov, Y., . "Oligopolistic competition and the optimal provision of products," CORE Discussion Papers RP 1179, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Asher Wolinsky, 1984. "Product Differentiation with Imperfect Information," Review of Economic Studies, Oxford University Press, vol. 51(1), pages 53-61.
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