Consumer Search and Price Competition

• 成果类型: Article
• 署名作者: Choi, Michael; Dai, Anovia Yifan; Kim, Kyungmin
• 署名单位: University of California System; University of California Irvine; Hong Kong Baptist University; University of Miami
• 刊物名称: ECONOMETRICA
• ISSN/ISSBN: 0012-9682
• DOI: 10.3982/ECTA14837
• 发表日期: 2018
• 页码: 1257-1281
• 关键词: information; auctions; demand; CHOICE; COSTS; MODEL

摘要

We consider an oligopoly model in which consumers engage in sequential search based on partial product information and advertised prices. By applying Weitzman's (1979) optimal sequential search solution, we derive a simple static condition that fully summarizes consumers' shopping outcomes and translates the pricing game among the sellers into a familiar discrete-choice problem. Exploiting the discrete-choice reformulation, we provide sufficient conditions that guarantee the existence and uniqueness of market equilibrium and analyze the effects of preference diversity and search frictions on market prices. Among other things, we show that a reduction in search costs raises market prices.