In this paper we study price rivalry between two firms facing a population of imperfectly informed buyers. The two sellers are geographically dispersed and consumers search for the lowest price. The competitive process either suffers from cyclical instability or stabilises at that price at which no buyer searches.
Subjective price search and price competition / P. Garella, J.J. Gabszewicz. - In: INTERNATIONAL JOURNAL OF INDUSTRIAL ORGANIZATION. - ISSN 0167-7187. - 4:3(1986), pp. 305-316. [10.1016/0167-7187(86)90023-8]
Subjective price search and price competition
P. GarellaPrimo
;
1986
Abstract
In this paper we study price rivalry between two firms facing a population of imperfectly informed buyers. The two sellers are geographically dispersed and consumers search for the lowest price. The competitive process either suffers from cyclical instability or stabilises at that price at which no buyer searches.
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