Price Distributions and Competition

16 Pages Posted: 23 Mar 2015

See all articles by Ken Burdett

Ken Burdett

University of Pennsylvania - Department of Economics

Eric Smith

University of Essex - Department of Economics

Date Written: October 2009

Abstract

Considerable evidence demonstrates that significant dispersion exists in the prices charged for seemingly homogeneous goods. This paper adopts a simple, flexible equilibrium model of search to investigate the way the market structure influences price dispersion. Using the noisy search approach, the paper demonstrates the effects of having a single large, price-leading firm with multiple outlets and a competitive fringe of small firms with one retail outlet each.

Keywords: price dispersion, consumer search, market structure

JEL Classification: D40, L7

Suggested Citation

Burdett, Ken and Smith, Eric, Price Distributions and Competition (October 2009). FRB Atlanta Working Paper No. 2009-27. Available at SSRN: https://ssrn.com/abstract=2481252 or http://dx.doi.org/10.2139/ssrn.2481252

Ken Burdett

University of Pennsylvania - Department of Economics ( email )

3718 Locust Walk
439 McNeil Building
Philadelphia, PA 19104
United States

Eric Smith (Contact Author)

University of Essex - Department of Economics ( email )

Wivenhoe Park
Colchester CO4 3SQ
United Kingdom

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