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Title: A More General Model of Price Complexity
Authors: Chioveanu, C
Keywords: price complexity;confusion technology;oligopoly markets
Issue Date: 2018
Abstract: This paper considers a model of competition in prices and price complexity levels, which accommodates concave and convex confusion technologies. In symmetric equilibrium, the probability of using high complexity increases in the number of Örms. In the limit, as the number of competitors goes to inÖnity, Örms use high complexity almost surely but the impact on consumer welfare depends on the characteristics of the confusion technology. SpeciÖcally, industry proÖts converge to the highest level with concave confusion technologies and to the lowest level when with convex confusion technologies. An improvement in consumer sophistication increases consumer welfare but does not reduce market complexity.
Appears in Collections:Dept of Economics and Finance Research Papers

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