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Sources of Limited Consideration and Market Power in E-Commerce

Author

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  • Michael Rolland Sullivan

Abstract

This article develops techniques for the empirical analysis of repeated sequential search over unordered alternatives using data on consumer search processes. I use these techniques to assess why consumers conduct little search in e-commerce and often pay significantly above the minimum available price for a product. Search costs could explain these facts, as could pre-search seller differentiation: Consumers with low search costs may not visit stores they dislike based on information known before search. I find that seller differentiation is primarily responsible for limited consideration and market power.

Suggested Citation

  • Michael Rolland Sullivan, 2026. "Sources of Limited Consideration and Market Power in E-Commerce," American Economic Journal: Microeconomics, American Economic Association, vol. 18(1), pages 1-29, February.
    • Handle: RePEc:aea:aejmic:v:18:y:2026:i:1:p:1-29
    DOI: 10.1257/mic.20230200
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    More about this item

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • 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
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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