Asymmetric Equilibria in Stahl Search Model

Sergey Kuniavsky

Munich Graduate School of Economics, Kaulbachstr. 45, LMU, Munich

Abstract: The paper explores the classic consumer search model introduced by Stahl in (Stahl, 1989). Literature uses the unique symmetric Nash Equilibrium, but does little to discuss asymmetric Equilibria. This paper describes all possible asymmetric Nash Equilibria of the original model, under the common literature assumption of consumer reserve price. Those include strategies of three types: pure, continuous mixing and a mixture of the previous two types. The findings suggest that on some level, lower than the symmetric Equilibrium, price dispersion will still exist, together with some level of price stickiness, both observed in reality.

Keywords: Sequential Consumer Search, Oligopoly, Asymmetric NE.

Language: English