Phase transition of demand explained by the heterogeneity of consumers' intrinsic preferences

• Autor(a) principal: Prado, Fernando Pigeard de Almeida
• Data de Publicação: 2006
• Tipo de documento: Artigo
• Idioma: eng
• Título da fonte: Repositório Institucional do FGV (FGV Repositório Digital)
• Texto Completo: http://hdl.handle.net/10438/12658
• topic: Heterogeneity of consumers' preferences; Social interaction; Social influence on price; Discontinuity of demand; Multiple demand equilibria; Economia; Consumidores - Preferência; Preços; Oferta e procura; Modelos econométricos

In 1991 Gary S. Becker presented A Note on Restaurant Pricing and Other Examples of Social In uences on Price explaining why many successful restaurants, plays, sporting events, and other activities do not raise their prices even with persistent excess demand. The main reason for this is due to the discontinuity of stable demands, which is explained in Becker's (1991) analysis. In the present paper we construct a discrete time stochastic model of socially interacting consumers deciding for one of two establishments. With this model we show that the discontinuity of stable demands, proposed by Gary S. Becker, depends crucially on an additional factor: the dispersion of the consumers' intrinsic preferences for the establishments.