• Economics
  • Published 1994

Overhead cost, price randomization, and price stickiness

  title={Overhead cost, price randomization, and price stickiness},
  author={Helmut Zink},
This paper investigates price setting when firms produce with increasing returns and customers are imperfectly informed about prices but customers can search. It is shown that there exists a unique randomization equilibrium where each customer is offered a random price by each firm known to him. If the number of firms is fixed then the expected price to be paid by a customer responds countercyclically to variations of demand per customer and it remains invariant with respect to variations of… CONTINUE READING