Asymmetric Price Competition with Price Inertia

Arthur Fishman ()

RAND Journal of Economics, 1994, vol. 25, issue 4, pages 608-618

Abstract: In this article, I analyze price competition under price inertia. After setting prices, sellers are unable to change them for a period of predetermined length, but may delay price commitments indefinitely. Although most consumers consider the firms' products to be perfect substitutes, an arbitrarily small number of "captive" consumers display brand loyalty to a particular firm, even when the competing brand is cheaper. In this article, I show that a firm with even slightly fewer captive consumers than its competitor achieves monopoly power over all remaining consumers.

Date: 1994
View citations in EconPapers

Downloads: (external link)
http://links.jstor.org/sici?sici=0741-6261%2819942 ... O%3B2-5&origin=repec full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:rje:randje:v:25:y:1994:i:winter:p:608-618

Ordering information: This journal article can be ordered from
http://gemini.econ.umd.edu/cgi-bin/rje_online.cgi

Access Statistics for this article

More articles in RAND Journal of Economics from The RAND Corporation
Series data maintained by ().