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A generalized model of sales

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Abstract

To provide a more exible workhorse model of temporary price reductions or "sales", this paper presents a substantially generalized "clearinghouse" sales framework. Our framework permits multiple dimensions of firm heterogeneity, and views firms as competing directly in utility rather than prices. The paper i) reproduces and extends many equilibria from the existing literature, ii) offers a range of new results on how firm heterogeneity affects market outcomes, iii) provides original insights into the number and type of firms that use sales, and iv) extends a "cleaning" procedure that is commonly used in empirical studies of sales and price dispersion.

Suggested Citation

  • Sandro Shelegia & Chris M. Wilson, 2016. "A generalized model of sales," Economics Working Papers 1541, Department of Economics and Business, Universitat Pompeu Fabra.
  • Handle: RePEc:upf:upfgen:1541
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    Cited by:

    1. Joao Montez & Nicolas Schutz, 2018. "All-Pay Oligopolies: Price Competition with Unobservable Inventory Choices," CRC TR 224 Discussion Paper Series crctr224_2018_020, University of Bonn and University of Mannheim, Germany.

    More about this item

    Keywords

    Sales; Price Dispersion; Advertising; Clearinghouse; Heterogeneity.;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • M3 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising

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