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Immobility, Rationing and Price Competition

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  • Michael Peters

Abstract

A model is studied where firms advertise prices and buyers play a noncooperative search game in an attempt to secure output from firms at the advertised prices. Firms face rising marginal costs and may not be willing to supply everything demanded at their price if they wind up with many buyers. It is shown that rationing will occur in equilibrium no matter how averse buyers are to this possibility. The result is specialised to a case where rationing occurs with probability one. The equilibrium price and outputs are characterised for this case.

Suggested Citation

  • Michael Peters, 1985. "Immobility, Rationing and Price Competition," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 52(4), pages 593-604.
    • Handle: RePEc:oup:restud:v:52:y:1985:i:4:p:593-604.
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    File URL: http://hdl.handle.net/10.2307/2297734
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    Cited by:

    1. Michael Sattinger, 2002. "A Queuing Model of the Market for Access to Trading Partners," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(2), pages 533-548, May.
    2. Halevy, Yoram & Michtaich, Igal, 2005. "Poisson Price Dispersion," Microeconomics.ca working papers halevy-05-07-26-12-10-45, Vancouver School of Economics, revised 25 Feb 2014.

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