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AN EQUILIBRIUM SEARCH MODEL OF SYNCHRONIZED SALES *
Author(s) -
Albrecht James,
PostelVinay Fabien,
Vroman Susan
Publication year - 2013
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/iere.12003
Subject(s) - search theory , product (mathematics) , simple (philosophy) , period (music) , computer science , econometrics , economics , mathematical economics , microeconomics , mathematics , physics , philosophy , geometry , epistemology , acoustics
We demonstrate the existence of periodic nonstationary equilibria with self‐generating cycles in a simple model of random search. Our results provide a theory of synchronized sales based on product market search by heterogeneous consumers. That is, our model explains how it can be optimal for all sellers to follow a repeated pattern of posting a high price for several periods and then posting a low price for one period.