Duhaime's Law Dictionary


Price Dispersion Definition:

Distinction as to the price of a product or service to certain class members of a market.

Economist William Nyre wrote, in his 2008 research paper:

"(P)rice dispersion (means) charging different prices to distinct, but roughly-similarly-situated customers."

Stigler wrote of price dispersion in the market for consumer purchase of automobiles, in the following terms:

"Price dispersion is a manifestation—and, indeed, it is the measure—of ignorance
in the market. Dispersion is a biased measure of ignorance because there is never
absolute homogeneity in the commodity if we include the terms of sale within the
concept of the commodity. Thus, some automobile dealers might perform more service, or carry a larger range of varieties in stock, and a portion of the observed dispersion is presumably attributable to such differences. But it would be metaphysical, and fruitless, to assert that all dispersion is due to heterogeneity."

REFERENCES:

  • Nieberding, James and Cantor, Robin, Price Dispersion and Class Certification in Antitrust Cases: An Economic Analysis, 14 J. Legal Econ. 61 (2007-2008)
  • Nye, William, The Implications of ‘Zeroing’ on Enforcement of U.S. Antidumping Law, United States Department of Justice Discussion Paper, August 2008.
  • Stigler, George, The Economics of Information, 69 J. Pol. Econ. 213, 214 (1961).

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