AN EQUILIBRIUM SEARCH MODEL OF SYNCHRONIZED SALES

Authors

  • James Albrecht,

    1. Georgetown University, U.S.A., and IZA, Germany; University of Britsol, U.K., Sciences Po, France, CEPR, U.K., and IZA, Germany; Georgetown University, U.S.A., and IZA, Germany
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  • Fabien Postel-Vinay,

    1. Georgetown University, U.S.A., and IZA, Germany; University of Britsol, U.K., Sciences Po, France, CEPR, U.K., and IZA, Germany; Georgetown University, U.S.A., and IZA, Germany
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  • Susan Vroman

    1. Georgetown University, U.S.A., and IZA, Germany; University of Britsol, U.K., Sciences Po, France, CEPR, U.K., and IZA, Germany; Georgetown University, U.S.A., and IZA, Germany
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    • 1We thank two anonymous referees and the editor for their constructive reports on this article. We also thank seminar participants at the Tinbergen Institute, the 2008 Economics and Music conference, the 2008 and 2010 NBER Summer Institutes, the 2009 SED meetings, the 2009 Search Theory Conference at Osaka University, and the 2011 SaM workshop in Le Mans for useful comments. The usual disclaimer applies. Please address correspondence to: James Albrecht, Department of Economics, Georgetown University, Washington, DC 20057. E-mail: albrecht@georgetown.edu.


  • Manuscript received January 2012; revised June 2012.

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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