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Dynamic Price Adjustment Under Imperfect Competition

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  • Eberwein, Curtis
  • To, Ted

Abstract

We study dynamic price adjustment under imperfect competition when consumers have non-time-separable preferences. In our model an intertemporal link arises in the consumers' maximization problems because current price and firms must take this into account when making their decisions. The main result is that equilibrium prices follow a dynamic stochastic process in which the current price depends on past prices and on random disturbances.
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Suggested Citation

  • Eberwein, Curtis & To, Ted, 1998. "Dynamic Price Adjustment Under Imperfect Competition," Economic Research Papers 268787, University of Warwick - Department of Economics.
    • Handle: RePEc:ags:uwarer:268787
    DOI: 10.22004/ag.econ.268787
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    More about this item

    Keywords

    Agricultural and Food Policy; Demand and Price Analysis;

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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