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Ordered Search in Differentiated Markets

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  • Zhou, Jidong

Abstract

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

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 13397.

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Date of creation: 13 Feb 2009
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Handle: RePEc:pra:mprapa:13397

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Keywords: non-random search; price dispersion; product differentiation;

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References

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  1. Susan Athey & Glenn Ellison, 2007. "Position Auctions with Consumer Search," Levine's Bibliography 122247000000001633, UCLA Department of Economics.
  2. Maria Arbatskaya, 2007. "Ordered search," RAND Journal of Economics, RAND Corporation, vol. 38(1), pages 119-126, 03.
  3. Perry, Motty & Wigderson, Avi, 1986. "Search in a Known Pattern," Journal of Political Economy, University of Chicago Press, vol. 94(1), pages 225-30, February.
  4. Marco A. Haan & Jose Luis Moraga-Gonzalez, 2009. "Advertising for Attention in a Consumer Search Model," Tinbergen Institute Discussion Papers 09-031/1, Tinbergen Institute.
  5. Mark Armstrong & John Vickers & Jidong Zhou, 2009. "Prominence and consumer search," RAND Journal of Economics, RAND Corporation, vol. 40(2), pages 209-233.
  6. Anderson, S.P. & Renault, R., 1997. "Pricing, Product Diversity and Search Costs: A Bertrand-Chamberlin-Diamond Model," Papers 97.481, Toulouse - GREMAQ.
  7. Yongmin Chen & Chuan He, 2011. "Paid Placement: Advertising and Search on the Internet," Economic Journal, Royal Economic Society, vol. 121(556), pages F309-F328, November.
  8. Kohn, Meir G. & Shavell, Steven, 1974. "The theory of search," Journal of Economic Theory, Elsevier, vol. 9(2), pages 93-123, October.
  9. 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, vol. 119(2), pages 403-456, May.
  10. M. L. Weitzman, 1978. "Optimal Search for the Best Alternative," Working papers 214, Massachusetts Institute of Technology (MIT), Department of Economics.
  11. Wolinsky, Asher, 1986. "True Monopolistic Competition as a Result of Imperfect Information," The Quarterly Journal of Economics, MIT Press, vol. 101(3), pages 493-511, August.
  12. Zhou, Jidong, 2009. "Prominence and Consumer Search: The Case With Multiple Prominent Firms," MPRA Paper 12554, University Library of Munich, Germany.
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Citations

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Cited by:
  1. Jose Luis Moraga-Gonzalez & Vaiva Petrikaite, 2011. "Consumer Search Costs and the Incentives to merge under Bertrand Competition," Tinbergen Institute Discussion Papers 11-099/1, Tinbergen Institute.
  2. Moraga-González, José-Luis & Petrikaite, Vaiva, 2013. "Search Costs, Demand-Side Economies and the Incentives to Merge under Bertrand Competition," CEPR Discussion Papers 9374, C.E.P.R. Discussion Papers.
  3. Armstrong, Mark & Zhou, Jidong, 2011. "Paying for prominence," MPRA Paper 30529, University Library of Munich, Germany.

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