 Search theory of imperfect competition with decreasing returns to scaleJournal of Economic Theory, 2024, vol. 218, issue C Abstract: I study a version of the search-theoretic model of imperfect competition by Burdett and Judd (1983) in which sellers operate a production technology with decreasing rather than constant returns to scale. Equilibrium exists and is unique, and its structure depends on the extent of search frictions. If search frictions are large enough, the price distribution is non-degenerate and atomless. If search frictions are neither too large nor too small, the price distribution is non-degenerate with an atom at the lowest price. If search frictions are small enough, the price distribution is degenerate. Equilibrium is efficient if and only if the price distribution is degenerate. Generically, neither the structure nor the welfare properties of equilibrium are the same as in Burdett and Judd (1983). As in Burdett and Judd (1983), however, equilibrium outcomes span the spectrum from pure monopoly to perfect competition as search frictions decline. Keywords: Search frictions; Imperfect competition; Price dispersion (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:218:y:2024:i:c:s0022053124000334 DOI: 10.1016/j.jet.2024.105827 Access Statistics for this article Journal of Economic Theory is currently edited by A. Lizzeri and K. Shell More articles in Journal of Economic Theory from Elsevier |
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