Price Distribution in a Symmetric Economy

Klaus Kultti () and Virrankoski Juha ()
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Virrankoski Juha: Helsinki School of Economics

The B.E. Journal of Macroeconomics, 2003, vol. 3, issue 1, 21

Abstract: We consider an economy with symmetric buyers and symmetric sellers. The sellers are in locations and post prices simultaneously. The buyers observe the prices, and each buyer visits one location. The buyers act independently and employ symmetric mixed strategies. We show that when there are several sellers in a location, the Nash equilibrium features price dispersion, i.e. the sellers post different prices. The equilibrium strategy of the sellers is a non-atomic distribution.

Keywords: price distribution; search (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (4)

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DOI: 10.2202/1534-5998.1061

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