Finitely repeated search and the diamond paradox

Arthur Fishman

Research output: Contribution to journalArticlepeer-review

Abstract

The Diamond paradox (Diamond, 1971) asserts that in a market for a homogeneous good, if all consumers have positive search costs and search sequentially, then the unique equilibrium price is the monopoly price. I show that any finitely repeated version of this search game may support competitive prices.

Original languageEnglish
Article number109933
JournalEconomics Letters
Volume205
DOIs
StatePublished - Aug 2021

Bibliographical note

Publisher Copyright:
© 2021 Elsevier B.V.

Keywords

  • Diamond paradox
  • Finitely repeated games
  • Sequential search

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