Noncooperative Flexible Pricing in a Homogenous Market
1986 (English)Report (Other academic)
A market is studied in which prices are set by the sellers, and where equilibrium is established through pure price adjustment. It is assumed that the sellers can observe each others' prices, and that each of them is free to instantly and costlessly change his price. In this setting it is shown that, when the number of competitors is large, a "cartel price", above the (Walrasian) competitive price, is an equilibrium - in fact the unique equilibrium price on the Pareto frontier.
Place, publisher, year, edition, pages
Stockholm: IIES , 1986. , 16 p.
Seminar Paper / Institute for International Economic Studies, Stockholm University, ISSN 0347-8769 ; 353
IdentifiersURN: urn:nbn:se:su:diva-41532OAI: oai:DiVA.org:su-41532DiVA: diva2:331074