Gain From Consumer's Information Searching and Price Dispersion

Price dispersion, information and learning

We consider an economy where trade is decentralized and agents have incomplete information with respect to the value of money. Agents’ learning evolves from private experiences and we explore how the formation of prices interacts with learning. We show that multiple equilibria arise, and equilibria with price dispersion entail more learning than equilibria with one price. Price dispersion incre...

Price Dispersion

A brief survey of the economics of price dispersion, written for the New Palgrave Dictionary of Economics, 2nd Edition. Journal of Economic Literature classification numbers: C72, D43, D82, D83. Price dispersion occurs when different sellers offer different prices for the same good in a given market. Thus, it differs from price discrimination under which a single seller offers different prices ...

Explaining Price Dispersion in the Manhattan Beer Market: Information Acquisition, Geographic Distribution and Searching under the Influence

1. Overview and Summary The term price dispersion is commonly used to refer to firms in the same market selling identical goods for different prices at the same time. Since the early conjecture by Bakos (1997) that electronic markets are likely to feature lower price dispersion on account of lower search costs, a number of researchers have studied how information technology alters the observed ...

Price Discrimination and Irrational Consumers

Price Dispersion

We model firm pricing given consumers follow simple reservation price rules. Such reservation rules are rational when consumers are sufficiently impatient. The equilibrium exhibits price dispersion in pure strategies, with lower price firms earning higher profits. The range of price dispersion increases with the number of firms: the highest price is the monopoly one, while the lowest price tend...