Price Heterogeneity as a Source of Heterogenous Demand
Dr. Gerelt Tserenjigmid, University of California, Santa Cruz
Friday, October 11, 2024
2:30 p.m. - 4:00 p.m.
307 Tier Building
We explore heterogenous prices as a source of heterogenous or stochastic demand. Heterogenous prices could arise either because there is actual price variation among consumers or because consumers (mis)perceive prices differently. Our main result says the following: if heterogenous prices have a distribution among consumers that is (in a sense) stable across observations, then a model where consumers have a common utility function but face heterogenous prices has precisely the same implications as a heterogenous preference/random utility model (with no price heterogeneity).