Finitely repeated search and the diamond paradox

Arthur Fishman

Economics Letters, 2021, vol. 205, issue C

Abstract: The Diamond paradox (Diamond, 1971) asserts that in a market for a homogeneous good, if all consumers have positive search costs and search sequentially, then the unique equilibrium price is the monopoly price. I show that any finitely repeated version of this search game may support competitive prices.

Keywords: Sequential search; Diamond paradox; Finitely repeated games (search for similar items in EconPapers)
JEL-codes: D43 D83 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:205:y:2021:i:c:s016517652100210x

DOI: 10.1016/j.econlet.2021.109933

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