Abstract
abstract In this paper we examine the effect of competition on price dispersion and argue that the effect is contingent on the ability of firms to meet market demand. Our comparative static results show that competition among symmetrically capacity-unconstrained firms, or among firms with asymmetric capacities leads to an overall price increase along the distribution function. To investigate these findings empirically, we use a novel data set from the U.S. corn seed industry with firm and farm level sales information for conventional and genetically modified corn seeds between 2004 and 2009. We estimate the empirical model using the Fixed Effect Instrumental Variable Quantile Regression and find evidence consistent with the theory. The analysis also shows that capacity-unconstrained seed firms charge a price premium, confirming the positive relationship between product availability and pricing found in our theoretical model.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
