Business, Management and Accounting
8 years ago

Price competition leads to rationing in equilibrium, impacting buyer-seller dynamics.

The Review of Economic Studies
Immobility, Rationing and Price Competition
Michael Peters

Paper Summary

Firms advertise prices, buyers search for deals, but firms may not supply everything if too many buyers show up. Rationing happens in equilibrium, no matter what buyers want. In some cases, rationing always occurs. The study figures out the prices and outputs in this situation.

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