Strategic price complexity in retail financial markets

• 成果类型: Article
• 署名作者: Carlin, Bruce I.
• 署名单位: University of California System; University of California Los Angeles
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2008.05.002
• 发表日期: 2009
• 页码: 278-287
• 关键词: Complexity; price dispersion; oligopoly

摘要

There is mounting empirical evidence to suggest that the law of one price is violated in retail financial markets: there is significant price dispersion even when products are homogeneous. Also, despite the large number of firms in the market, prices remain above marginal cost and may even rise as more firms enter. in a non-cooperative oligopoly pricing model, I show that these anomalies arise when firms add complexity to their price structures. Complexity increases the market power of the firms because it prevents some consumers from becoming knowledgeable about prices in the market. In the model, as competition increases, firms tend to add more complexity to their prices as a best response, rather than make their disclosures more transparent. Because this may substantially decrease consumer surplus in these markets, such practices have important welfare implications. (C) 2008 Elsevier B.V. All rights reserved.