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.
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Paper provided by Portuguese Competition Authority in its series Working Papers with number
04.
Find related papers by JEL classification: D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
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