| Author: | Zink, H. |
| Title: | Overhead cost and price behavior: the role of market intransparency, search, and price randomization |
| Journal: | International Economic Review
1996 : AUG, VOL. 37:3, p. 719-733 |
| Index terms: | INTERNATIONAL ECONOMICS PRICES |
| Language: | eng |
| Abstract: | This paper investigates price setting when first produce with increasing returns, and customers are imperfectly informed about prices but can search. A unique randomization equilibrium exists where each customer is offered a random price by each firm known to him. If the number of first is fixed than the expected price to be paid by a customer responds countercyclically to variations of demand per customer and remains invariant with respect to variations of the number of customers. This price behavior corresponds well with new evidence on price behavior. |
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