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Ordered Search and Equilibrium Obfuscation

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  • Chris M. Wilson
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    Abstract

    This paper demonstrates the incentives for an oligopolist to obfuscate by deliberately increasing the cost with which consumers can locate its product and price.� Consumers are allowed to choose the optimal order in which to search firms and firms are able to influence this order through their choice of search costs and prices.� Competition does not ensure market transparency - for a large range of parameters, equilibrium search costs are positive and asymmetric across firms.� Intuitively, an obfuscating firm can soften the competition for consumers with low time costs by inducing the remaining consumers to optimally first search its rival.

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    File URL: http://www.economics.ox.ac.uk/materials/working_papers/paper401.pdf
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    Bibliographic Info

    Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 401.

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    Date of creation: 01 Aug 2008
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    Handle: RePEc:oxf:wpaper:401

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    Keywords: Search Costs; Search Order; Advertising;

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    Citations

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    Cited by:
    1. Chioveanu, Ioana & Zhou, Jidong, 2009. "Price Competition and Consumer Confusion," MPRA Paper 17340, University Library of Munich, Germany.
    2. Zhou, Jidong, 2009. "Prominence and Consumer Search: The Case With Multiple Prominent Firms," MPRA Paper 12554, University Library of Munich, Germany.
    3. Susan Athey & Glenn Ellison, 2009. "Position Auctions with Consumer Search," NBER Working Papers 15253, National Bureau of Economic Research, Inc.
    4. Nick Vikander, 2014. "Sellouts, Beliefs, and Bandwagon Behavior," Discussion Papers 14-15, University of Copenhagen. Department of Economics.
    5. Glenn Ellison & Alexander Wolitzky, 2009. "A Search Cost Model of Obfuscation," NBER Working Papers 15237, National Bureau of Economic Research, Inc.
    6. Michele Piccione & Ran Spiegler, 2012. "Price Competition Under Limited Comparability," The Quarterly Journal of Economics, Oxford University Press, vol. 127(1), pages 97-135.
    7. Jose Luis Moraga-Gonzalez & Zsolt Sandor & Matthijs R. Wildenbeest, . "Do higher search costs make the markets less competitive?," Working Papers, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy 2013-08, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    8. Steffen Huck & Jidong Zhou, 2011. "Consumer Behavioural Biases in Competition: A Survey," Working Papers, New York University, Leonard N. Stern School of Business, Department of Economics 11-16, New York University, Leonard N. Stern School of Business, Department of Economics.
    9. Armstrong, Mark & Zhou, Jidong, 2011. "Paying for prominence," MPRA Paper 30529, University Library of Munich, Germany.
    10. Ioanna Chioveanu & Jidong Zhou, 2011. "Price Competition with Consumer Confusion," Working Papers, New York University, Leonard N. Stern School of Business, Department of Economics 11-19, New York University, Leonard N. Stern School of Business, Department of Economics.
    11. José Luis Moraga-Gonzalez & Zsolt Sándor & Matthijs R. Wildenbeest, 2014. "Prices, Product Differentiation, and Heterogeneous Search Costs," CESifo Working Paper Series 4889, CESifo Group Munich.
    12. Eduardo Perez-Richet, 2012. "Competing with Equivocal Information," Working Papers hal-00675126, HAL.

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