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A Note on Costly Sequential Search and Oligopoly Pricing


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  • Maarten C.W. Janssen

    (Faculty of Economics, Erasmus Universiteit Rotterdam)

  • Jose Luis Moraga-Gonzalez

    (Groningen University)

  • Matthijs R. Wildenbeest

    (Faculty of Economics, Erasmus Universiteit Rotterdam)


We modify the paper of Stahl (1989) [Stahl, D.O., 1989. Oligopolistic pricing with sequential consumer search. American Economic Review 79, 700–12] by relaxing the assumption that consumers obtain the first price quotation for free. When all price quotations are costly to obtain, the unique symmetric equilibrium need not involve full consumer participation. The region of parameters for which non-shoppers do not fully participate in the market becomes larger as the number of shoppers decreases and/or the number of firms increases. The comparative statics properties of this new type of equilibrium are interesting. In particular, expected price increases as search cost decreases and is constant in the number of shoppers and in the number of firms. Welfare falls as firms enter the market. We show that monopoly pricing never obtains with truly costly search. This discussion paper has resulted in a publication in the International Journal of Industrial Organization . (2005, 23(5-6), 451-66.)

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 04-068/1.

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Date of creation: 15 Jun 2004
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Handle: RePEc:dgr:uvatin:20040068

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Keywords: sequential consumer search; oligopoly; price dispersion;

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  1. Simon P. Anderson & Regis Renault, 1999. "Pricing, product diversity, and search costs: a Bertrand-Chamberlin-Diamond model," Virginia Economics Online Papers 335, University of Virginia, Department of Economics.
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Cited by:
  1. Maarten C.W. Janssen & Mariëlle C. Non, 2005. "Advertising and Consumer Search in a Duopoly Model," Tinbergen Institute Discussion Papers, Tinbergen Institute 05-022/1, Tinbergen Institute.
  2. Maarten C. W. Janssen & José Luis Moraga-González & Matthijs R. Wildenbeest, 2004. "Consumer Search and Oligopolistic Pricing: An Empirical Investigation," CESifo Working Paper Series 1292, CESifo Group Munich.


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