A BEJM Topics article.

Abstract

We consider an economy with symmetric buyers and symmetric sellers. The sellers are in locations and post prices simultaneously. The buyers observe the prices, and each buyer visits one location. The buyers act independently and employ symmetric mixed strategies. We show that when there are several sellers in a location, the Nash equilibrium features price dispersion, i.e. the sellers post different prices. The equilibrium strategy of the sellers is a non-atomic distribution.

Submitted: May 6, 2002 · Accepted: April 14, 2003 · Published: April 22, 2003

Originally published in Topics in Macroeconomics.

Recommended Citation

Kultti, Klaus and Virrankoski, Juha (2003) "Price Distribution in a Symmetric Economy," Topics in Macroeconomics: Vol. 3 : Iss. 1, Article 5.
Available at: http://www.bepress.com/bejm/topics/vol3/iss1/art5