Edgeworth Cycle
A phenomenon in oligopolistic markets where prices cyclically rise and fall due to firms undercutting each other, named after economist Francis Edgeworth.
Implications
A pricing pattern in oligopolistic markets where firms alternate between aggressive price cuts and price increases, typically seen in industries like gasoline retailing, where companies react quickly to competitors' pricing changes.
Example
Example: In the retail gasoline market, an Edgeworth cycle occurs when one station lowers its prices, leading others to follow, and then prices gradually increase until the cycle repeats.
Related Terms
Different from stable pricing strategies, the Edgeworth cycle involves frequent and reactive pricing changes in response to competitors, leading to cyclical price fluctuations.
Get INSTANT comprehensive market research of any industry
Chat with AII Consultant Now!
