Informational Complementarity

• 成果类型: Article
• 署名作者: Ke, T. Tony; Lin, Song
• 署名单位: Massachusetts Institute of Technology (MIT); Hong Kong University of Science & Technology
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2019.3377
• 发表日期: 2020
• 页码: 3699-3716
• 关键词: Search theory; COMPLEMENTARITY; Bandit Problems; Price competition

摘要

Many products have similar or common attributes and are thus correlated. We show that, when these attributes are uncertain for consumers, a complementarity effect can arise among competing products in the sense that the lower price of one product may increase the demands for the others. This effect occurs when consumers sequentially search for information about both common and idiosyncratic product attributes before purchase. We characterize the optimal search strategy for the correlated search problem, provide the conditions for the existence of the complementarity effect, and show that the effect is robust under a wide range of alternative assumptions. We further explore the implications of the effect for pricing. When firms compete in price, although product correlation may weaken differentiation between the firms, the complementarily effect owing to correlated search may raise equilibrium price and profit.