Price Dispersion: Theoretical Considerations and Empirical Evidence from the Marseilles Fish Market

Alan Kirman and Annick Vignes
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Annick Vignes: European University Institute

Chapter 10 in Issues in Contemporary Economics, 1991, pp 160-185 from Palgrave Macmillan

Abstract: Abstract It is an obvious and well-documented fact that identical units of goods are on sale at different prices in the same geographical region to the same consumers.1 Strictly speaking Diamond’s observation that ‘In Walrasian theory all purchases of a homogeneous good occur at the same price’ (Diamond, 1987) is not contradicted by this fact since no two transactions take place at precisely the same time and place and thus any two units of good sold in different transactions cannot really be regarded as units of a homogeneous good. Nevertheless the typical more intuitive explanation given is that a situation in which identical units of a good were sold at similar times in the same market for significantly different prices could not be sustained. In fact one could try to make this argument precise by using a continuity argument where the only parameters differentiating goods were time and space. In this case the argument would be that prices of units of a good with the same physical characteristics available at about the same place and time are similar.

Keywords: Demand Function; Mixed Strategy; Demand Curve; Reservation Price; Price Discrimination (search for similar items in EconPapers)
Date: 1991
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DOI: 10.1007/978-1-349-11573-0_11

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