Price dispersion in duopolies with heterogeneous consumers

Maxim Sinitsyn

International Journal of Industrial Organization, 2009, vol. 27, issue 2, pages 197-205

Abstract: In this paper, I modify Varian's [Varian, H.R. (1980). A model of sales, American Economic Review, 70(4), 651-659] model of sales to allow for heterogeneity in consumer preferences. I show that in mixed strategy equilibria each firm charges a finite number of prices. Using this characterization, I examine the effect of consumer heterogeneity on firms' optimal pricing strategies.

Keywords: Price; dispersion; Mixed; equilibrium; Heterogeneous; consumers (search for similar items in EconPapers)
Date: 2009

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Persistent link: http://EconPapers.repec.org/RePEc:eee:indorg:v:27:y:2009:i:2:p:197-205

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