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Ordered Search in Differentiated Markets

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  • Jidong Zhou

Abstract

This note presents an ordered search model in which consumers search both for price and product fitness. We construct an equilibrium in which there is price dispersion and prices rise in the order of search. The top firms in consumer search process, though charge lower prices, earn higher profits due to their larger market shares.

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Bibliographic Info

Paper provided by Economics and Econometrics Research Institute (EERI), Brussels in its series EERI Research Paper Series with number EERI_RP_2009_28.

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Date of creation: 09 2009
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Handle: RePEc:eei:rpaper:eeri_rp_2009_28

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Keywords: Search; price dispersion; product differentiation.;

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  1. Perry, Motty & Wigderson, Avi, 1986. "Search in a Known Pattern," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 94(1), pages 225-30, February.
  2. 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.
  3. Maria Arbatskaya, 2007. "Ordered search," RAND Journal of Economics, RAND Corporation, RAND Corporation, vol. 38(1), pages 119-126, 03.
  4. Yongmin Chen & Chuan He, 2006. "Paid Placement: Advertising and Search on the Internet," Working Papers, NET Institute 06-02, NET Institute, revised Sep 2006.
  5. M. L. Weitzman, 1978. "Optimal Search for the Best Alternative," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 214, Massachusetts Institute of Technology (MIT), Department of Economics.
  6. Haan, Marco A. & Moraga-Gonzalez, Jose L., 2009. "Advertising for attention in a consumer search model," IESE Research Papers, IESE Business School D/794, IESE Business School.
  7. Susan Athey & Glenn Ellison, 2009. "Position Auctions with Consumer Search," NBER Working Papers 15253, National Bureau of Economic Research, Inc.
  8. Wolinsky, Asher, 1986. "True Monopolistic Competition as a Result of Imperfect Information," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 101(3), pages 493-511, August.
  9. Zhou, Jidong, 2009. "Prominence and Consumer Search: The Case With Multiple Prominent Firms," MPRA Paper 12554, University Library of Munich, Germany.
  10. Mark Armstrong & John Vickers & Jidong Zhou, 2009. "Prominence and consumer search," RAND Journal of Economics, RAND Corporation, RAND Corporation, vol. 40(2), pages 209-233.
  11. Ali Hortaç Su & Chad Syverson, 2004. "Product Differentiation, Search Costs, And Competition in the Mutual Fund Industry: A Case Study of S&P 500 Index Funds," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 119(2), pages 403-456, May.
  12. Kohn, Meir G. & Shavell, Steven, 1974. "The theory of search," Journal of Economic Theory, Elsevier, Elsevier, vol. 9(2), pages 93-123, October.
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Cited by:
  1. Mark Armstrong & Jidong Zhou, 2011. "Paying for Prominence," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 121(556), pages F368-F395, November.
  2. Moraga-Gonzalez, Jose L. & Petrikaite, Vaiva, 2011. "Consumer search costs and the incentives to merge under Bertrand Competition," IESE Research Papers, IESE Business School D/934, IESE Business School.
  3. Jose L. Moraga-Gonzalez & Vaiva Petrikaite, 2012. "Search Costs, Demand-Side Economies and the Incentives to merge under Bertrand Competition," Tinbergen Institute Discussion Papers, Tinbergen Institute 12-017/1, Tinbergen Institute.

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