Document Type
Discussion Paper
Publication Date
4-1-2003
CFDP Number
1412
CFDP Pages
45
Abstract
We consider the model of price competition for a single buyer among many sellers in a dynamic environment. The surplus from each trade is allowed to depend on the path of previous purchases, and as a result, the model captures phenomena such as learning by doing and habit formation in consumption characterize Markovian equilibria for finite and infinite horizon versions of the model and show that the stationary infinite horizon version of the model possesses an equilibrium where all the sellers receive an equilibrium payoff equal to their marginal contribution to the social welfare.
Recommended Citation
Bergemann, Dirk and Välimäki, Juuso, "Dynamic Price Competition" (2003). Cowles Foundation Discussion Papers. 1681.
https://elischolar.library.yale.edu/cowles-discussion-paper-series/1681