Patterns of Price Competition and the Structure of Consumer Choice

Mark Armstrong and John Vickers

MPRA Paper from University Library of Munich, Germany

Abstract: We explore patterns of price competition in an oligopoly where consumers vary in the set of suppliers they consider for their purchase. In the case of "nested reach" we find equilibria, unlike those in existing models, in which price competition is segmented: small firms offer only low prices and large firms only offer high prices. We characterize equilibria in the three-firm case using correlation measures of interaction between pairs of firms. We show how entry, merger and market expansion can affect patterns of price competition in novel ways.

Keywords: Bertrand competition; price dispersion; consideration sets; mixed strategies (search for similar items in EconPapers)
JEL-codes: C72 D43 D83 L13 L15 (search for similar items in EconPapers)
Date: 2020-01
New Economics Papers: this item is included in nep-com, nep-ind, nep-mic and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:98346

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