Limited Time Offer and Consumer Search

• 成果类型: Article
• 署名作者: Gong, Zheng; Huang, Jin
• 署名单位: The Chinese University of Hong Kong, Shenzhen; New York University; NYU Shanghai
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2022.00445
• 发表日期: 2025
• 关键词: consumer search; limited time offer; price advertisements; sales tactic

摘要

This paper examines a widely observed yet theoretically underexplored sales tactic: the limited time offer. By focusing on price-directed search markets, we offer a novel perspective on the application of limited time offers by firms and their implications for social welfare. We build a search model where firms advertise dynamic pricing to influence a consumer's search order. Across various model settings, we demonstrate that limited time offers serve as the most effective pricing tool for firms to achieve search prominence or implement search discrimination, with their impact on social welfare varying depending on the market context. In particular, although existing literature suggests that limited time offers are anticompetitive in markets where prices are unobservable presearch, our findings show that, in markets with observable prices, limited time offers can enhance social efficiency in certain cases by facilitating a socially optimal search order.