Search Frictions and Market Power in Negotiated-Price Markets

• 成果类型: Article
• 署名作者: Allen, Jason; Clark, Robert; Houde, Jean-Francois
• 署名单位: Bank of Canada; Queens University - Canada; University of Wisconsin System; University of Wisconsin Madison; National Bureau of Economic Research
• 刊物名称: JOURNAL OF POLITICAL ECONOMY
• ISSN/ISSBN: 0022-3808
• DOI: 10.1086/701684
• 发表日期: 2019
• 页码: 1550-1598
• 关键词: empirical-evidence; COMBINING MICRO; COSTS; COMPETITION; mergers; DISCRIMINATION; dispersion; duration; MODEL

摘要

We provide a framework for empirical analysis of negotiated-price markets. Using mortgage market data and a search and negotiation model, we characterize the welfare impact of search frictions and quantify the role of search costs and brand loyalty for market power. Search frictions reduce consumer surplus by $12/month/consumer, 28 percent of which can be associated with discrimination, 22 percent with inefficient matching, and 50 percent with search costs. Banks with large consumer bases have margins 70 percent higher than those with small consumer bases. The main source of this incumbency advantage is brand loyalty; however, price discrimination based on search frictions accounts for almost a third.