An Equilibrium Search Model of Synchronized Sales*

Albrecht, James; Postel‐Vinay, Fabien; Vroman, Susan

doi:10.1111/iere.12003

Cited by 20 publications

(18 citation statements)

References 23 publications

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“…According to intertemporal price discrimination theories, price dispersion arises because local monopolists change their prices over time in order to discriminate between different types of buyers (see, e.g., Conlisk et al (1984), Sobel (1984), Albrecht et al (2013)). For the sake of illustration, consider a market populated by several monopolists, each selling the same good and facing a constant inflow of heterogeneous buyers.…”

Section: Intertemporal Price Discriminationmentioning

confidence: 99%

The Morphology of Price Dispersion

Kaplan¹,

Menzio²

2014

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This paper is a study of the shape and structure of the distribution of prices at which an identical good is sold in a given market and time period. We find that the typical price distribution is symmetric and leptokurtic, with a standard deviation between 19% and 36%. Only 10% of the variance of prices is due to variation in the expensiveness of the stores at which a good is sold, while the remaining 90% is due, in approximately equal parts, to differences in the average price of a good across equally expensive stores and to differences in the price of a good across transactions at the same store. We show that the distribution of prices that households pay for the same bundle of goods is approximately Normal, with a standard deviation between 9% and 14%. Half of this dispersion is due to differences in the expensiveness of the stores where households shop, while the other half is mostly due to differences in households' choices of which goods to purchase at which stores. We find that households with fewer employed members pay lower prices, and do so by visiting a larger number of stores, rather than by shopping more frequently.JEL Codes: D2, D4, E3, L1

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Section: Intertemporal Price Discriminationmentioning

confidence: 99%

The Morphology of Price Dispersion

Kaplan¹,

Menzio²

2014

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“…It is interesting to contrast the type of price discrimination advanced in Kaplan et al (2016) with intertemporal price discrimination (see, e.g., Conlisk et al [1984] and Sobel [1984] or, in a search-theoretic context, Albrecht et al [2013] and Menzio and Trachter [2015b]). The key to intertemporal price discrimination is a negative correlation between a buyer's valuation and his ability to intertemporally substitute purchases.…”

Section: Discussionmentioning

confidence: 99%

Price Dispersion When Stores Sell Multiple Goods

Trachter¹

2017

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S earch frictions are a prominent departure from the standard style of model we tend to write, which relies on frictionless Walrasian markets. They are not only prominent because they help us construct interesting models where policy can play a particularly important role, but also because search frictions are relatively easy to measure in the data. A large fraction of the literature on search frictions dwells with models of product markets where, for one reason or another, customers face a cost to act in the market (i.e., pay a search or switching cost to switch stores, pay a cost to learn a set of prices, etc.). A well-known result in a large class of models (based on the seminal work of Burdett and Judd [1983]) is that price dispersion for identical goods arises in equilibrium.The empirical evidence on price dispersion for product marketsa good measure of the extent of the friction, as there should be no price dispersion for homogeneous goods in a Walrasian market -is large, mostly documenting dispersion for particular goods in retail markets. The literature abstracts from several important features of retail markets. One of these features is that most stores sell multiple goods, a feature that not only changes the measurement of search frictions, but also opens new avenues for theoretical research, given the scant availability of models of multiproduct pricing, i.e., models where …rms price multiple goods simultaneously. In this paper, I review the work of Kaplan et al. (2016) (KMRT from now on), which is a recent study on the empirical properties of price dispersion in a multiproduct setting and provides a model to rationalize it.The views expressed in this article are those of the author and do not necessarily represent those of the Federal Reserve Bank of Richmond or the Federal Reserve System.

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“…With 3 Existing theories of intertemporal price discrimination assume that buyers di¤er in their valuation of the good. In Conslik, Gerstner, and Sobel, (1984) there are high and low valuation buyers.…”

Section: Environmentmentioning

confidence: 99%

“…Moreover, our model shows that the same element is su¢ cient to generate both equilibrium price dispersion and intertemporal price discrimination: Heterogeneity across buyers in their ability to shop around, at di¤erent locations and at di¤erent times of the day. 3 The empirical evidence in Aguiar and Hurst (2007) and Menzio (2014a, 2014b) suggests that these traits are common to individuals with a relatively low value of time, such as the elderly and the unemployed.…”

Section: Introductionmentioning

confidence: 99%

Equilibrium Price Dispersion Across and within Stores

Menzio

Trachter

2015

SSRN Journal

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We develop a search-theoretic model of the product market that generates price dispersion across and within stores. Buyers di¤er with respect to their ability to shop around, both at di¤erent stores and at di¤erent times. The fact that some buyers can shop from only one seller while others can shop from multiple sellers causes price dispersion across stores. The fact that the buyers who can shop from multiple sellers are more likely to be able to shop at inconvenient times induces price dispersion within stores. Speci…cally, it causes sellers to post di¤erent prices for the same good at di¤erent times in order to discriminate between di¤erent types of buyers.JEL Codes: D43.

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An Equilibrium Search Model of Synchronized Sales*

Cited by 20 publications

References 23 publications

The Morphology of Price Dispersion

The Morphology of Price Dispersion

Price Dispersion When Stores Sell Multiple Goods

Equilibrium Price Dispersion Across and within Stores

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