Asymmetric capacity constraints and equilibrium price dispersion
Michael Arnold () and
Economics Letters, 2011, vol. 111, issue 2, 158-160
Price dispersion arises despite perfect information about prices. In equilibrium the higher capacity firm adopts a high-price, high-availability strategy, the lower capacity firm adopts a low-price, low-availability strategy, and consumers are more likely to shop at the high-price firm.
Keywords: Equilibrium; price; dispersion; Capacity; constraints; Search (search for similar items in EconPapers)
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