Price Dispersion in the Lab and on the Internet: Theory and Evidence
Price dispersion is ubiquitous in settings that closely approximate textbook Bertrand competition. We show that only a little bounded rationality among sellers is needed to rationalize such dispersion. A variety of statistical tests, based on datasets from two independent laboratory experiments and structural estimates of the parameters of our models, suggest that bounded-rationality-based theories of price dispersion organize the data remarkably well. Evidence is also presented to suggest that the models are consistent with data from a leading Internet price comparison site.
Year of publication: |
2004
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Authors: | Baye, Michael R. ; Morgan, John |
Published in: |
RAND Journal of Economics. - The RAND Corporation, ISSN 0741-6261. - Vol. 35.2004, 3, p. 448-466
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Publisher: |
The RAND Corporation |
Saved in:
Saved in favorites
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