Equilibrium price dispersion across and within stores

Guido Menzio, Nicholas Trachter

    Research output: Contribution to journalArticle

    Abstract

    We develop a search-theoretic model of the product market that generates price dispersion across and within stores. Buyers differ with respect to their ability to shop around, both at different stores and at different times. The fact that some buyers can shop from only one seller while others can shop from multiple sellers causes price dispersion across stores. The fact that the buyers who can shop from multiple sellers are more likely to be able to shop at multiple times causes price dispersion within stores. Specifically, it causes sellers to post different prices for the same good at different times in order to discriminate between different types of buyers.

    Original languageEnglish (US)
    Pages (from-to)205-220
    Number of pages16
    JournalReview of Economic Dynamics
    Volume28
    DOIs
    StatePublished - Apr 2018

    Keywords

    • Bargain hunting
    • Multidimensional price dispersion
    • Price discrimination
    • Search

    ASJC Scopus subject areas

    • Economics and Econometrics

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