Instability of endogenous price dispersion equilibria: A simulation
模拟了企业更新价格的不同协议，发现内生价格离散均衡在缺乏外部协调机制时具有战略脆弱性，但某些协议下结果接近基准模型。
Abstract Models of price posting by firms and search by consumers (such as Burdett and Judd 1983), often feature equilibria with endogenous price dispersion. However, such equilibria are strategically fragile. In order to investigate how robust they are in the absence of an external coordination mechanism, I simulate various protocols firms may use to update their prices. Despite firms being myopic, some protocols yield results close to the benchmark model. If firms rush to update before observing competitors’ actions, profits are higher on average but volatile and cyclical. With cost dispersion, prices become more stable as they are more closely tied to costs. All results are robust to moderate menu costs.