Poisson Price Dispersion
We study a competitive market for a homogeneous good, in which the only uncertainty concerns the number of identical sellers, who are sampled by a finite Poisson process from a continuum of potential participants. It is shown that, in equilibrium, there is price dispersion. Specifically, prices conform to a Poisson process on an interval, which is a proper subset of that between the sellers' cost and the buyers' reservation price. Although prices arbitrarily close to the latter may occur in equilibrium, they are less frequent than prices at the lower end of the pricing interval.
|Date of creation:||26 Jul 2005|
|Date of revision:||25 Feb 2014|
|Contact details of provider:|| Web page: http://www.economics.ubc.ca/|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Roger B. Myerson, 1998.
"Population uncertainty and Poisson games,"
International Journal of Game Theory,
Springer;Game Theory Society, vol. 27(3), pages 375-392.
- Roger B. Myerson, 1994. "Population Uncertainty and Poisson Games," Discussion Papers 1102R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Roger B. Myerson, 1994. "Population Uncertainty and Poisson Games," Discussion Papers 1102, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Eden, Benjamin, 1990. "Marginal Cost Pricing When Spot Markets Are Complete," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1293-1306, December.
- Matthews, Steven, 1987.
"Comparing Auctions for Risk Averse Buyers: A Buyer's Point of View,"
Econometric Society, vol. 55(3), pages 633-646, May.
- Steven A. Matthews, 1985. "Comparing Auctions for Risk Averse Buyers: A Buyer's Pointof View," Discussion Papers 664R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Burdett, Kenneth & Judd, Kenneth L, 1983. "Equilibrium Price Dispersion," Econometrica, Econometric Society, vol. 51(4), pages 955-969, July.
- Harstad, Ronald M. & Kagel, John H. & Levin, Dan, 1990. "Equilibrium bid functions for auctions with an uncertain number of bidders," Economics Letters, Elsevier, vol. 33(1), pages 35-40, May.
- Peters, Michael, 1984. "Bertrand Equilibrium with Capacity Constraints and Restricted Mobility," Econometrica, Econometric Society, vol. 52(5), pages 1117-1127, September.
- Michael Peters & Ralph A. Winter, 1983. "Market Equilibrium and the Resolution of Uncertainty," Canadian Journal of Economics, Canadian Economics Association, vol. 16(3), pages 381-390, August.
- Shilony, Yuval, 1977. "Mixed pricing in oligopoly," Journal of Economic Theory, Elsevier, vol. 14(2), pages 373-388, April.
- Michael Peters, 1985. "Immobility, Rationing and Price Competition," Review of Economic Studies, Oxford University Press, vol. 52(4), pages 593-604.
- James D. Dana Jr., 1999. "Equilibrium Price Dispersion Under Demand Uncertainty: The Roles of Costly Capacity and Market Structure," RAND Journal of Economics, The RAND Corporation, vol. 30(4), pages 632-660, Winter.
When requesting a correction, please mention this item's handle: RePEc:ubc:pmicro:halevy-05-07-26-12-10-45. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Maureen Chin)
If references are entirely missing, you can add them using this form.