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British Journal of Economics, Management & Trade

British Journal of Economics, Management & Trade, ISSN: 2278-098X,Vol.: 8, Issue.: 2

 

Original Research Article

 

Dynamic Model of the Price Dispersion of Homogeneous Goods

 

 

Joachim Kaldasch1*

1EBC Hochschule Berlin, Alexanderplatz 1, 10178 Berlin, Germany.

 

Abstracts

 

Presented is an analytic microeconomic model of the temporal price dispersion of homogeneous goods in polypoly markets. This new approach is based on the idea that the price dispersion has its origin in the dynamics of the purchase process. The price dispersion is determined by the chance that demanded and supplied product units meet in a given price interval. It can be characterized by a fat-tailed Laplace distribution for short and by a lognormal distribution for long time horizons. Taking random temporal variations of demanded and supplied units into account both the mean price and also the standard deviation of the price dispersion are governed by a lognormal distribution. A comparison with empirical investigations confirms the model statements.

 

Keywords :

Market dynamics; price dispersion; consumer goods; lognormal distribution; Laplace distribution.

 

Full Article - PDF    Page 120-131    Article Metrics

 

DOI : 10.9734/BJEMT/2015/17849

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