Price dispersion in stationary networked markets

Eduard Talamàs

Games and Economic Behavior, 2019, vol. 115, issue C, 247-264

Abstract: Different sellers often sell the same good at different prices. Using a strategic bargaining model, I characterize how the equilibrium prices of a good depend on the interaction between its sellers' costs, its buyers' values, and a network capturing various frictions associated with trading it. In contrast to the standard random-matching model of bargaining in stationary markets, I allow agents to strategically choose whom to make offers to, which qualitatively changes how the network shapes prices. As in the random-matching model, the market decomposes into different submarkets, and—in the limit as bargaining frictions vanish—the law of one price holds within but not across them. But strategic choice of partners changes both how the market decomposes into different submarkets and the determinants of each submarket's price.

Keywords: Price dispersion; Non-cooperative bargaining; Trading frictions; Networked markets; Stationary markets; Strategic choice of partners (search for similar items in EconPapers)
JEL-codes: C78 D43 D85 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0899825619300405
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:115:y:2019:i:c:p:247-264

DOI: 10.1016/j.geb.2019.03.005

Access Statistics for this article

Games and Economic Behavior is currently edited by E. Kalai

More articles in Games and Economic Behavior from Elsevier
Bibliographic data for series maintained by Catherine Liu ().