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The Price Distribution of Consumer Goods in Retail Markets

Author

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  • Joachim Kaldasch

    (International School of Management, Hauptstraße 27, 10827, Berlin, Germany.)

Abstract

Derived is an analytic dynamic model of the price distribution of consumer goods in retail markets. The stationary price distribution is established from the conservation equation of offered units and two simplifying assumptions. Under the condition that independent traders make small random price variations around a nearly constant supply price, the stationary price distribution of a good must have the form of a fat-tailed Laplace distribution. The standard deviation of the distribution is determined by the price volatility of the goods. Also, the price distribution of an ensemble of goods is established and applied to empirical data with good quantitative agreement.

Suggested Citation

  • Joachim Kaldasch, 2023. "The Price Distribution of Consumer Goods in Retail Markets," International Journal of Economics and Financial Issues, Econjournals, vol. 13(5), pages 52-58, September.
    • Handle: RePEc:eco:journ1:2023-05-7
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Price Dispersion; Consumer Goods; Retail Markets; Market Dynamics; Laplace Distribution;
    All these keywords.

    JEL classification:

    • D0 - Microeconomics - - General
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • F0 - International Economics - - General

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