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Price Dynamics in Repeat-Purchase Markets
journal contribution
posted on 2023-05-16, 09:56 authored by Sibly, HAA retail market in which customers repeat purchase is modelled. When customer movement between firms is sluggish, price overshooting characterizes firms' optimal response to demand or cost shocks. Thus retail prices would be predicted to be more variable than wholesale prices, a prediction at variance with empirical evidence. Uncertainty in demand and customer imperfect information are introduced into the model to attempt to reconcile this inconsistency between theory and evidence. The introduction of demand uncertainty actually increases the magnitude of price overshooting. By contrast, the introduction of imperfect customer information reduces the variability in retail prices. Copyright © 1995, Wiley Blackwell. All rights reserved
History
Publication title
Economic RecordVolume
71Issue
213Pagination
179-190ISSN
0013-0249Department/School
TSBEPublisher
Economic Soc Of Australia Brown Prior Anderson Pty LtdPlace of publication
5 Evans St, Burwood Victoria, Australia, 3125Repository Status
- Restricted