A simple spatial model for Edgeworth Cycles

Maskin and Tirole (1998) formalise Edgeworth's (1925) model of a dynamic equilibrium between two players where prices increase sharply and decrease slowly; the Edgeworth Cycle. Here, we present an application of the model, showing how Edgeworth Cycles might arise in a marketplace where spatial competition is important. We illustrate the approach using the example of retail gasoline markets where Edgeworth Cycles have been widely observed.

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Year of publication:	2010
Authors:	Wills-Johnson, Nick ; Bloch, Harry
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 108.2010, 3, p. 334-336
Publisher:	Elsevier
Subject:	Edgeworth Cycles Spatial markets

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Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008866933