A Simple Spatial Model for Edgeworth Cycles

14 Pages Posted: 26 Feb 2010

See all articles by Harry Bloch

Harry Bloch

Curtin University of Technology - Curtin Business School - School of Economics and Finance

Nick Wills-Johnson

DBP

Date Written: February 24, 2010

Abstract

Maskin & Tirole (1998) formalise Edgeworth’s (1925) model of a dynamic equilibrium between two players where prices increase sharply and decrease slowly; the Edgeworth Cycle. Here, we present an application of the model, showing how Edgeworth Cycles might arise in a marketplace where spatial competition is important. We illustrate the approach using the example of retail gasoline markets where Edgeworth Cycles have been widely observed.

Keywords: Edgeworth Cycles, spatial markets

JEL Classification: C65, L13, L81

Suggested Citation

Bloch, Harry and Wills-Johnson, Nick, A Simple Spatial Model for Edgeworth Cycles (February 24, 2010). Available at SSRN: https://ssrn.com/abstract=1558746 or http://dx.doi.org/10.2139/ssrn.1558746

Harry Bloch

Curtin University of Technology - Curtin Business School - School of Economics and Finance ( email )

Curtin University
GPO Box U 1987
Perth, 6845
Australia
+61 8 9266 2035 (Phone)
+61 8 9266 3026 (Fax)

Nick Wills-Johnson (Contact Author)

DBP ( email )

PO Box Z5267
St Georges Terrace
Perth, 6831
Australia

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