Résumé
We embed observational learning (BHW) in a symmetric duopoly with random arrivals and search frictions. With fixed posted prices, a mixed-strategy pricing equilibrium exists and yields price dispersion even with ex-ante identical firms. We provide closed-form cascade bands and show wrong cascades occur with positive probability for interior parameters, vanishing as signals become precise or search costs fall; absorption probabilities are invariant to the arrival rate. In equilibrium, the support of mixed prices is connected and overlapping; its width shrinks with signal precision and expands with search costs, and mean prices comove accordingly. Under Calvo price resets (Poisson opportunities), stationary dispersion and mean prices fall; when signals are sufficiently informative, wrong-cascade risk also declines. On welfare, a state-contingent Pigouvian search subsidy implements the planner’s cutoff. Prominence (biased first visits) softens competition and depresses welfare; neutral prominence is ex-ante optimal.
Mots-clés
social learning; informational cascades; price dispersion; search; vertical differentiation.;
Codes JEL
- C73: Stochastic and Dynamic Games • Evolutionary Games • Repeated Games
- D43: Oligopoly and Other Forms of Market Imperfection
- D83: Search • Learning • Information and Knowledge • Communication • Belief
- L13: Oligopoly and Other Imperfect Markets
Référence
Arina Azova et Georgy Lukyanov, « Herding Prices: Social Learning and Dynamic Competition in Duopoly », TSE Working Paper, n° 25-1685, octobre 2025.
Voir aussi
Publié dans
TSE Working Paper, n° 25-1685, octobre 2025