Prominence and Consumer Search: The Case With Multiple Prominent Firms
AbstractThis paper extends Armstrong, Vickers, and Zhou (2007) to the case with multiple prominent firms. All consumers first search among prominent firms, and if their products are not satisfactory, they continue to search among non-prominent ones. Prominent firms will charge a lower price than their non-prominent rivals as in the case with a single prominent firm, but relative to the situation without any prominent firm, the presence of more than one prominent firm can induce all firms to raise their prices. We also characterize how market prices and welfare vary with the number of prominent firms.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 12554.
Date of creation: 06 Jan 2009
Date of revision:
consumer search; marketing; prominence; product differentiation;
Find related papers by JEL classification:
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-01-10 (All new papers)
- NEP-COM-2009-01-10 (Industrial Competition)
- NEP-MIC-2009-01-10 (Microeconomics)
- NEP-MKT-2009-01-10 (Marketing)
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