Non-Reservation Price Equilibria and Search Without Priors
- Author(s)
- Anton Sobolev, Alexei Parakhonyak
- Abstract
We analyse a model of oligopolistic competition in which consumers search without priors. Consumers do not have prior beliefs about the distribution of prices charged by firms and thus try to use a robust search procedure. We show that the optimal stopping rule is stochastic and that for any distribution of search costs there is a unique market equilibrium which is characterised by price dispersion. Although listed prices approach the monopoly price as the number of firms increases, the effective price paid by consumers does not depend on the number of firms.
- Organisation(s)
- Department of Economics
- External organisation(s)
- National Research University
- Journal
- The Economic Journal
- Volume
- 125
- Pages
- 887-909
- No. of pages
- 23
- ISSN
- 0013-0133
- DOI
- https://doi.org/10.1111/ecoj.12265
- Publication date
- 05-2015
- Peer reviewed
- Yes
- Austrian Fields of Science 2012
- 502013 Industrial economics, 502047 Economic theory, 502021 Microeconomics
- Keywords
- ASJC Scopus subject areas
- Economics and Econometrics
- Portal url
- https://ucrisportal.univie.ac.at/en/publications/336a0b95-7765-473a-94d9-9453416913ae