An Equilibrium Search Model of Synchronized Sales

21 Pages Posted: 18 Apr 2013

See all articles by James Albrecht

James Albrecht

Georgetown University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Fabien Postel‐Vinay

University of Bristol

Susan Vroman

Georgetown University; IZA Institute of Labor Economics

Date Written: May 2013

Abstract

We demonstrate the existence of periodic nonstationary equilibria with self‐generating cycles in a simple model of random search. Our results provide a theory of synchronized sales based on product market search by heterogeneous consumers. That is, our model explains how it can be optimal for all sellers to follow a repeated pattern of posting a high price for several periods and then posting a low price for one period.

Suggested Citation

Albrecht, James W. and Postel‐Vinay, Fabien and Vroman, Susan B., An Equilibrium Search Model of Synchronized Sales (May 2013). International Economic Review, Vol. 54, Issue 2, pp. 473-493, 2013. Available at SSRN: https://ssrn.com/abstract=2253133 or http://dx.doi.org/10.1111/iere.12003

James W. Albrecht

Georgetown University - Department of Economics ( email )

Washington, DC 20057
United States
202-687-6105 (Phone)
202-687-6102 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Fabien Postel‐Vinay

University of Bristol

University of Bristol,
Senate House, Tyndall Avenue
Bristol, BS8 ITH
United Kingdom

Susan B. Vroman

Georgetown University ( email )

Washington, DC 20057
United States
202-687-6024 (Phone)
202-687-6102 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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