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Price Dispersion and Short Run Equilibrium in a Queuing Model

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  • Michael Sattinger

Abstract

Price dispersion is analyzed in the context of a queuing market where customers enter queues to acquire a good or service and may experience delays. With menu costs, price dispersion arises and can persist in the medium and long run. The queuing market rations goods in the same way whether firm prices are optimal or not. Price dispersion reduces the rate at which customers get the good and reduces customer welfare.

Suggested Citation

  • Michael Sattinger, 2003. "Price Dispersion and Short Run Equilibrium in a Queuing Model," Discussion Papers 03-09, University at Albany, SUNY, Department of Economics.
  • Handle: RePEc:nya:albaec:03-09
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    File URL: http://www.albany.edu/economics/research/workingp/2003/PriceDispersion.pdf
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    References listed on IDEAS

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    1. Michael Sattinger, 1991. "Consistent Wage Offer and Reservation Wage Distributions," The Quarterly Journal of Economics, Oxford University Press, vol. 106(1), pages 277-288.
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    7. Burdett, Kenneth & Judd, Kenneth L, 1983. "Equilibrium Price Dispersion," Econometrica, Econometric Society, vol. 51(4), pages 955-969, July.
    8. Carlton, Dennis W., 1989. "The theory and the facts of how markets clear: Is industrial organization valuable for understanding macroeconomics?," Handbook of Industrial Organization,in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 15, pages 909-946 Elsevier.
    9. Burdett, Kenneth & Mortensen, Dale T, 1998. "Wage Differentials, Employer Size, and Unemployment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 257-273, May.
    10. Helmut Bester, 1988. "Bargaining, Search Costs and Equilibrium Price Distributions," Review of Economic Studies, Oxford University Press, vol. 55(2), pages 201-214.
    11. Gerard R. Butters, 1977. "Equilibrium Distributions of Sales and Advertising Prices," Review of Economic Studies, Oxford University Press, vol. 44(3), pages 465-491.
    12. George J. Stigler, 1961. "The Economics of Information," Journal of Political Economy, University of Chicago Press, vol. 69, pages 213-213.
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