IDEAS home Printed from https://ideas.repec.org/a/cje/issued/v21y1988i4p883-902.html
   My bibliography  Save this article

Price Dispersion, Price Flexibility, and Repeated Purchasing

Author

Listed:
  • John McMillan
  • Peter B. Morgan

Abstract

This paper presents a search model in which consumers repeatedly purchase some good. The repetition of purchases leads to the formatio n of implicit contracts with sellers that generate a kink in the demand curve facing each seller. These kinks can generate equilibrium price dispersion under conditions where single-purchase search models predict no price dispersion. Despite the kinks, prices are at least partially flexible in that some, and possibly all, sellers change their prices in response to changes in production costs or demand.

Suggested Citation

  • John McMillan & Peter B. Morgan, 1988. "Price Dispersion, Price Flexibility, and Repeated Purchasing," Canadian Journal of Economics, Canadian Economics Association, vol. 21(4), pages 883-902, November.
    • Handle: RePEc:cje:issued:v:21:y:1988:i:4:p:883-902
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0008-4085%28198811%2921%3A4%3C883%3APDPFAR%3E2.0.CO%3B2-%23
    Download Restriction: only available to JSTOR subscribers
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chudik, Alexander, 2012. "A simple model of price dispersion," Economics Letters, Elsevier, vol. 117(1), pages 344-347.
    2. Sibly, Hugh, 2001. "Price Inflexibility in Markets with Repeat Purchasing," Journal of Macroeconomics, Elsevier, vol. 23(3), pages 459-475, July.
    3. Timothy J. Richards, 2006. "Sales by multi-product retailers," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 27(4), pages 261-277.
    4. Dhar, Tirtha & Stiegert, Kyle W. & Gould, Brian W., 2002. "Price Dispersion, Search, and Market Power," Working Papers 201549, University of Wisconsin-Madison, Department of Agricultural and Applied Economics, Food System Research Group.
    5. Mariano Tommasi, 1993. "The Consequences of Price Instability on Search Markets," UCLA Economics Working Papers 700, UCLA Department of Economics.
    6. Saul Lach, 2002. "Existence And Persistence Of Price Dispersion: An Empirical Analysis," The Review of Economics and Statistics, MIT Press, vol. 84(3), pages 433-444, August.
    7. Mariano Tommasi, 1992. "Intertemporal Pricing in Search Markets, Customer Markets and Price Rigidity," UCLA Economics Working Papers 681, UCLA Department of Economics.
    8. Smith, Vincent H. & Johnson, James B., 2005. "Environmental Regulation, Market Power and Price Discrimination in the Agricultural Chemical Industry," 2005 Annual meeting, July 24-27, Providence, RI 19520, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    9. Adrienne Ohler & Vincent Smith, 2013. "Population Characteristics And Price Dispersion In The Market For Prescription Drugs," Contemporary Economic Policy, Western Economic Association International, vol. 31(3), pages 486-502, July.
    10. Adrienne M. Ohler, 2011. "Who Searches for Low Prices? Population Characteristics and Price Dispersion in the Market for Prescription Drugs," Working Paper Series 20110701, Illinois State University, Department of Economics.
    11. Joaquín Alegre & Maria Sard, 2006. "Tour operators' price strategie in the Balearic Islands," DEA Working Papers 19, Universitat de les Illes Balears, Departament d'Economía Aplicada.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cje:issued:v:21:y:1988:i:4:p:883-902. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Prof. Werner Antweiler (email available below). General contact details of provider: https://edirc.repec.org/data/ceaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.