IDEAS home Printed from https://ideas.repec.org/a/eee/ecolet/v116y2012i3p551-553.html
   My bibliography  Save this article

Asymmetric marginal costs in search models

Author

Listed:
  • Shelegia, Sandro

Abstract

I show that marginal cost asymmetry has important implications for search models. In several widely used search models with mixed strategy equilibria, excluding some special cases, firms with different marginal costs cannot randomize prices in the same interval. So, even a small asymmetry in marginal costs may result in a drastic asymmetry in equilibrium prices.

Suggested Citation

  • Shelegia, Sandro, 2012. "Asymmetric marginal costs in search models," Economics Letters, Elsevier, vol. 116(3), pages 551-553.
    • Handle: RePEc:eee:ecolet:v:116:y:2012:i:3:p:551-553
    DOI: 10.1016/j.econlet.2012.05.011
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165176512002790
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econlet.2012.05.011?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

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

    References listed on IDEAS

    as
    1. Varian, Hal R, 1980. "A Model of Sales," American Economic Review, American Economic Association, vol. 70(4), pages 651-659, September.
    2. Wilde, Louis L., 1977. "Labor market equilibrium under nonsequential search," Journal of Economic Theory, Elsevier, vol. 16(2), pages 373-393, December.
    3. Burdett, Kenneth & Judd, Kenneth L, 1983. "Equilibrium Price Dispersion," Econometrica, Econometric Society, vol. 51(4), pages 955-969, July.
    4. Burdett, Kenneth & Mortensen, Dale T, 1998. "Wage Differentials, Employer Size, and Unemployment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 257-273, May.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. David P. Myatt & David Ronayne, 2023. "Asymmetric Models of Sales," Rationality and Competition Discussion Paper Series 450, CRC TRR 190 Rationality and Competition.
    2. Sandro Shelegia & Chris M. Wilson, 2021. "A Generalized Model of Advertised Sales," American Economic Journal: Microeconomics, American Economic Association, vol. 13(1), pages 195-223, February.
    3. Shelegia, Sandro & Wilson, Chris, 2016. "A Generalized Model of Sales," EconStor Preprints 147411, ZBW - Leibniz Information Centre for Economics.
    4. Sneha Bakshi, 2020. "Limits of price competition: cost asymmetry and imperfect information," International Journal of Game Theory, Springer;Game Theory Society, vol. 49(4), pages 913-932, December.
    5. Shahryar Gheibi, 2020. "Low-Cost-Driven Leadership: A Theory for Price Dispersion in Competitive Markets," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 19(1), pages 61-76, June.
    6. Baumann, Stuart, 2017. "Comparative Advertising: The role of prices," MPRA Paper 79872, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Atayev, Atabek, 2022. "Uncertain product availability in search markets," Journal of Economic Theory, Elsevier, vol. 204(C).
    2. Atabek Atayev, 2021. "Uncertain Product Availability in Search Markets," Papers 2109.15211, arXiv.org.
    3. Donna, Javier D. & Schenone, Pablo & Veramendi, Gregory F., 2020. "Networks, frictions, and price dispersion," Games and Economic Behavior, Elsevier, vol. 124(C), pages 406-431.
    4. Moraga-González, José Luis & Sándor, Zsolt & Wildenbeest, Matthijs R., 2017. "Nonsequential search equilibrium with search cost heterogeneity," International Journal of Industrial Organization, Elsevier, vol. 50(C), pages 392-414.
    5. Jose Luis Moraga-Gonzalez & Zsolt Sandor & Matthijs R. Wildenbeest, 2008. "Nonparametric Estimation of the Costs of Non-Sequential Search," Tinbergen Institute Discussion Papers 07-102/1, Tinbergen Institute.
    6. Ş. Akın & Brennan Platt, 2014. "A theory of search with deadlines and uncertain recall," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 55(1), pages 101-133, January.
    7. Yassine Badra, 2020. "The impact of online low search costs on firms' incentives to invest in quality," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(8), pages 1629-1633, December.
    8. Robert Jump, 2016. "Evolutionary learning and the stability of wage posting equilibria," Journal of Evolutionary Economics, Springer, vol. 26(5), pages 1117-1135, December.
    9. Burdett, Kenneth & Trejos, Alberto & Wright, Randall, 2017. "A new suggestion for simplifying the theory of money," Journal of Economic Theory, Elsevier, vol. 172(C), pages 423-450.
    10. Shapiro, Joel, 2006. "Wage and effort dispersion," Economics Letters, Elsevier, vol. 92(2), pages 163-169, August.
    11. Garloff, Alfred, 2003. "Lohndispersion und Arbeitslosigkeit: Neuere Ansätze in der Suchtheorie," ZEW Discussion Papers 03-60, ZEW - Leibniz Centre for European Economic Research.
    12. Atayev, Atabek, 2021. "Uncertain product availability in search markets," ZEW Discussion Papers 21-089, ZEW - Leibniz Centre for European Economic Research.
    13. Atabek Atayev, 2021. "Nonlinear Prices, Homogeneous Goods, Search," Papers 2109.15198, arXiv.org.
    14. Andrew Rhodes & Jidong Zhou, 2019. "Consumer Search and Retail Market Structure," Management Science, INFORMS, vol. 67(6), pages 2607-2623, June.
    15. Benaïm, Michel & Hofbauer, Josef & Hopkins, Ed, 2009. "Learning in games with unstable equilibria," Journal of Economic Theory, Elsevier, vol. 144(4), pages 1694-1709, July.
    16. Peter Diamond, 2011. "Unemployment, Vacancies, Wages," American Economic Review, American Economic Association, vol. 101(4), pages 1045-1072, June.
    17. Burdett, Ken & Smith, Eric, 2010. "Price distributions and competition," Economics Letters, Elsevier, vol. 106(3), pages 180-183, March.
    18. Katja Seim & Michael Sinkinson, 2016. "Mixed pricing in online marketplaces," Quantitative Marketing and Economics (QME), Springer, vol. 14(2), pages 129-155, June.
    19. Christian Schultz, 2002. "Transparency and Tacit Collusion in a Differentiated Market," CESifo Working Paper Series 730, CESifo.
    20. Krolikowski, Pawel M. & McCallum, Andrew H., 2021. "Goods-market frictions and international trade," Journal of International Economics, Elsevier, vol. 129(C).

    More about this item

    Keywords

    Asymmetric costs; Pricing; Mixed strategies;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

    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:eee:ecolet:v:116:y:2012:i:3:p:551-553. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolet .

    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.