American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Asymmetric Models of Sales
American Economic Journal: Microeconomics
(pp. 281–311)
Abstract
We generalize the captive-and-shopper model of sales to allow asymmetries in production costs and captive audiences, in oligopoly. Both kinds of asymmetry determine the firms that compete (via randomized sales) to serve the price-comparing shoppers, while other firms exploit their captive audiences. In contrast to a model with symmetric costs (but asymmetric captive audiences), there are natural situations in which more than two firms use sales by engaging in pairwise battles across distinct price intervals. We also study the choice of production technologies via innovation and extensions to consider costly acquisitions of captives and shoppers, and captives' choice of captor.Citation
Myatt, David P., and David Ronayne. 2026. "Asymmetric Models of Sales." American Economic Journal: Microeconomics 18 (1): 281–311. DOI: 10.1257/mic.20240437Additional Materials
JEL Classification
- D11 Consumer Economics: Theory
- D21 Firm Behavior: Theory
- D43 Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
- L14 Transactional Relationships; Contracts and Reputation; Networks
- O31 Innovation and Invention: Processes and Incentives