PROMINENCE AND MARKET POWER: ASYMMETRIC OLIGOPOLY WITH SEQUENTIAL CONSUMER SEARCH

• 成果类型: Article
• 署名作者: Hanazono, Makoto; Kudoh, Noritaka
• 署名单位: Nagoya University; Nagoya University
• 刊物名称: INTERNATIONAL ECONOMIC REVIEW
• ISSN/ISSBN: 0020-6598
• DOI: 10.1111/iere.12704
• 发表日期: 2024
• 页码: 1249-1281
• 关键词: imperfect competition; price dispersion; COSTS; MODEL; distributions; entry; big

摘要

This article presents a new perspective on the nature of market power through the lens of firm prominence. We build a model of oligopolistic price competition with sequential consumer search, showing that a larger firm sets a higher price than its smaller competitors. Consumers are more likely to encounter sellers from a larger firm both immediately and in future interactions, resulting in less-elastic demand for that firm. Small firms can free-ride on the prominent firm's market power to raise their prices and earn higher profits. The Herfindahl-Hirschman Index provides a useful guide for welfare evaluation.