TY - JOUR
T1 - Price dispersion in oligopoly
AU - Fershtman, Chaim
PY - 1982/12
Y1 - 1982/12
N2 - In the world of perfect markets consumers are assumed to respond instantly to every small price change. However, in the real world it is not clear that any small price change will have a great impact on consumers' decisions and that, regardless of their habit, they will shift from one brand to the other. The purpose of this paper is to examine oligopolistic price competition under the assumption that consumers are non-responsive to small price differences. The paper proves the existence of equilibrium in which firms do not necessarily charge the same price; however some of the firms charge their monopolistic price and others charge prices close to that price.
AB - In the world of perfect markets consumers are assumed to respond instantly to every small price change. However, in the real world it is not clear that any small price change will have a great impact on consumers' decisions and that, regardless of their habit, they will shift from one brand to the other. The purpose of this paper is to examine oligopolistic price competition under the assumption that consumers are non-responsive to small price differences. The paper proves the existence of equilibrium in which firms do not necessarily charge the same price; however some of the firms charge their monopolistic price and others charge prices close to that price.
UR - http://www.scopus.com/inward/record.url?scp=19844375197&partnerID=8YFLogxK
U2 - 10.1016/0167-2681(82)90012-9
DO - 10.1016/0167-2681(82)90012-9
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AN - SCOPUS:19844375197
SN - 0167-2681
VL - 3
SP - 389
EP - 401
JO - Journal of Economic Behavior and Organization
JF - Journal of Economic Behavior and Organization
IS - 4
ER -