Asymmetric marginal costs in search models

Sandro Shelegia

Economics Letters, 2012, vol. 116, issue 3, 551-553

Abstract: I show that marginal cost asymmetry has important implications for search models. In several widely used search models with mixed strategy equilibria, excluding some special cases, firms with different marginal costs cannot randomize prices in the same interval. So, even a small asymmetry in marginal costs may result in a drastic asymmetry in equilibrium prices.

Keywords: Asymmetric costs; Pricing; Mixed strategies (search for similar items in EconPapers)
JEL-codes: L1 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:116:y:2012:i:3:p:551-553

DOI: 10.1016/j.econlet.2012.05.011

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