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Longitudinal data on the availability and prices of two related products in a local market are used to assess the dynamic performance of the markets for these products. Consistent with prior research, a large degree of price dispersion was found for both products. There was some evidence of a modest reduction in price dispersion over time, and of the lowest quality models to “drop out” of the market. Store quality differences and likely search costs did not appear to explain the remaining dispersion.
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Greg J. Duncan (1981) studied this question.
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