Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94057
Authors: 
Schmidt, Robert C.
Year of Publication: 
2010
Series/Report no.: 
SFB/TR 15 Discussion Paper 301
Abstract: 
This paper analyzes price competition in an infinitely repeated duopoly game. In each period, consumers remember the existence and location of their previous supplier. New information is gathered via search or word-of-mouth communication. Market outcomes are history-dependent, and the Markov perfection refinement is used to narrow the set of equilibria. Firms are shown to use mixed pricing strategies in equilibrium. The resulting price dispersion generates non-trivial market share dynamics. The goal of the paper is to characterize these dynamics, and to reveal the driving forces behind them.
Subjects: 
repeat purchasing
search
customer loyalty
lock-in
mixed pricing
JEL: 
D83
L11
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.