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An Equilibrium Search Model of Synchronized Sales

Author

Listed:
  • James Albrecht

    (GU - Georgetown University [Washington])

  • Fabien Postel-Vinay

    (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique, LEA - Laboratoire d'Economie Appliquée - INRA - Institut National de la Recherche Agronomique, Department of Economics - UCL - University College of London [London], PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CEPR - Center for Economic Policy Research - CEPR, University of Bristol [Bristol], IZA - Institute for the Study of Labor - Institute for the Study of Labor, DELTA - Département et Laboratoire d'Economie Théorique et Appliquée - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique, INRA)

  • Susan Vroman

    (GU - Georgetown University [Washington])

Abstract

We demonstrate the existence of periodic nonstationary equilibria with self-generating cycles in a simple model of random search. Our results provide a theory of synchronized sales based on product market search by heterogeneous consumers. That is, our model explains how it can be optimal for all sellers to follow a repeated pattern of posting a high price for several periods and then posting a low price for one period.

Suggested Citation

  • James Albrecht & Fabien Postel-Vinay & Susan Vroman, 2013. "An Equilibrium Search Model of Synchronized Sales," Post-Print hal-03384683, HAL.
  • Handle: RePEc:hal:journl:hal-03384683
    DOI: 10.1111/iere.12003
    Note: View the original document on HAL open archive server: https://hal.science/hal-03384683
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    References listed on IDEAS

    as
    1. Diamond, Peter & Fudenberg, Drew, 1989. "Rational Expectations Business Cycles in Search Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 606-619, June.
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    Cited by:

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    2. Kaldasch, Joachim, 2015. "Dynamic Model of the Price Dispersion of Homogeneous Goods," MPRA Paper 64723, University Library of Munich, Germany.
    3. Leo Kaas & Bihemo Kimasa, 2021. "Firm Dynamics With Frictional Product And Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(3), pages 1281-1317, August.
    4. James Albrecht, 2015. "Burdett-Judd Redux," 2015 Meeting Papers 985, Society for Economic Dynamics.
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    6. Greg Kaplan & Guido Menzio, 2015. "The Morphology Of Price Dispersion," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 56(4), pages 1165-1206, November.
    7. Nicolas de Roos & Vladimir Smirnov, 2020. "Collusion with intertemporal price dispersion," RAND Journal of Economics, RAND Corporation, vol. 51(1), pages 158-188, March.
    8. Hao Lan & Tim Lloyd & Wyn Morgan & Paul W. Dobson, 2022. "Are food price promotions predictable? The hazard function of supermarket discounts," Journal of Agricultural Economics, Wiley Blackwell, vol. 73(1), pages 64-85, February.
    9. Greg Kaplan & Guido Menzio, 2013. "The Research Agenda: Greg Kaplan and Guido Menzio on the Macroeconomics of Bargain Hunting," EconomicDynamics Newsletter, Review of Economic Dynamics, vol. 14(2), November.
    10. Joachim Kaldasch, 2023. "The Price Distribution of Consumer Goods in Retail Markets," International Journal of Economics and Financial Issues, Econjournals, vol. 13(5), pages 52-58, September.

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