Raising search costs to deter window shopping can increase profits and welfare

• 成果类型: Article
• 署名作者: Taylor, Greg
• 署名单位: University of Oxford
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• DOI: 10.1111/1756-2171.12180
• 发表日期: 2017
• 页码: 387-408
• 关键词: advertising markets; MODEL; obfuscation

摘要

Consumers tend to browse products they are interested in and firms often invest resources in selling to them. A consequence, I show, is that it is optimal for a firm to increase the cost of browsing (even though this drives away potential customers) because doing so allows it to target sales efforts at those consumers most likely to buy. Despite representing pure waste, this can increase welfare by facilitating efficient allocation of sales or marketing resources. For a similar reason, consumers often benefit from search costs in aggregate, and prefer them to other means of screening, such as price increases.