Search, common knowledge, and competition

• 成果类型: Article
• 署名作者: Kuksov, Dmitri
• 署名单位: Washington University (WUSTL)
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2005.02.010
• 发表日期: 2006
• 页码: 95-108
• 关键词: Common knowledge; search costs; uncertainty

摘要

This paper analyzes the effects of buyer search costs and seller private and common knowledge on seller competition. It shows that lack of common knowledge results in the equilibrium price continuously decreasing to the perfectly competitive one as buyer search costs for price decrease from positive for all buyers to zero for all buyers, even if each market agent's uncertainty (in the private knowledge) is small. At the same time, if the uncertainty of each seller about buyer valuations is small, the effects of a small change in the search costs or of information structure on pricing may be large (but continuous). (c) 2005 Elsevier Inc. All rights reserved.