Pricing, product diversity, and search costs: a Bertrand-Chamberlin-Diamond model

• 成果类型: Article
• 署名作者: Anderson, SP; Renault, R
• 署名单位: University of Virginia; Universite de Caen Normandie
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• DOI: 10.2307/2556072
• 发表日期: 1999
• 页码: 719-735
• 关键词: monopolistic competition; imperfect information; differentiation; equilibrium

摘要

We study price competition in the presence of search costs and product differentiation. The limit cases of the model are the Bertrand Paradox, the Diamond Paradox, and Chamberlinian monopolistic competition. Market prices rise with search costs and decrease with the number of firms. Prices may initially fall with the degree of product differentiation because more diversity leads to more search and hence more competition. Equilibrium diversity rises with search costs, while the optimum level falls, so entry is excessive. The market failure is most pronounced for low preference for variety and high search costs.