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Do Lower Search Costs Reduce Prices and Price Dispersion?

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  • Pedro Pereira

    (Autoridade da Concorrência)

Abstract

This paper presents a search model, for which a decrease in the search cost may lead to lower prices and to a lower price variance, but may also lead to the opposite. This result contrasts with some predictions about the impact of the Internet on prices, but fits well with the empirical literature on e-commerce.

Suggested Citation

  • Pedro Pereira, 2004. "Do Lower Search Costs Reduce Prices and Price Dispersion?," Working Papers 04, Portuguese Competition Authority.
    • Handle: RePEc:pca:wpaper:04
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. He, X. & Reiner, D., 2018. "Consumer Engagement in Energy Markets: The Role of Information and Knowledge," Cambridge Working Papers in Economics 1867, Faculty of Economics, University of Cambridge.
    2. Aurora García-Gallego & Nikolaos Georgantzís & Pedro Pereira & José C. Pernías-Cerrillo, 2005. "Competing Against Simulated Equilibrium Price Dispersions: An Experiment On Internet-Assisted Search Markets," Working Papers 05-12, NET Institute.
    3. García-Gallego Aurora & Georgantzís Nikolaos & Pereira Pedro & Pernías-Cerrillo José C., 2016. "Bias and Size Effects of Price-Comparison Platforms: Theory and Experimental Evidence," Review of Network Economics, De Gruyter, vol. 15(1), pages 1-34, March.
    4. Aurora García-Gallego & Nikolaos Georgantzís & Pedro Pereira & José C. Pernías-Cerrillo, 2004. "Risk Attitudes and Internet Search Engines: Theory and Experimental Evidence," Working Papers 04-03, NET Institute, revised Oct 2004.

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    More about this item

    Keywords

    Search; Price Levels; Price Dispersion;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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