AN EQUILIBRIUM SEARCH MODEL OF SYNCHRONIZED SALES* |
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| Authors: | James Albrecht Fabien Postel‐Vinay Susan Vroman |
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| Institution: | 1. Georgetown University, U.S.A., and IZA, Germany;2. University of Britsol, U.K., Sciences Po, France, CEPR, U.K., and IZA, Germany;3. Georgetown University, U.S.A., and IZA, Germany |
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| Abstract: | 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. |
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