Macro shocks cause equilibrium price dispersion

David de Meza and Francesco Reito

Economics Letters, 2021, vol. 208, issue C

Abstract: Price dispersion is shown to arise when demand is stochastic, ex-ante identical competitive firms set price prior to the realization of uncertainty and ex-ante identical buyers cannot switch sellers if rationed.

Keywords: Stochastic demand; Price dispersion; Rationing; Waste (search for similar items in EconPapers)
JEL-codes: D61 D81 H23 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:208:y:2021:i:c:s0165176521003591

DOI: 10.1016/j.econlet.2021.110082

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