search query: @indexterm PRICE THEORY / total: 201
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| Author: | Arnold, M. A. |
| Title: | Costly search, capacity constraints, and Bertrand equilibrium price dispersion |
| Journal: | International Economic Review
2000 : FEB, VOL. 41:1, p. 117-131 |
| Index terms: | Political economy Price theory Price policy Equilibrium theory |
| Language: | eng |
| Abstract: | This article analyzes the impact of transaction costs and capacity constarints in an almost competitive market with homogenous firms that compete on price. It characterizes conditions under which Nash equilibria with price dispersion exist; in equilibrium, firms play pure strategies in prices and consumers adopt a symmetric strategy. Price dispersion is possible even though consumers all have same search cost and valuation for the item and prices charged by all firms are common knowledge. |
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