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Multiproduct Firms, Consumer Search, and Demand Heterogeneity

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  • Yuta Kittaka

Abstract

I construct a consumer search model with demand‐side heterogeneity, in which some consumers search for a single product while others search for multiple products. I show that a positive demand shock to one product induces firms to increase that product's price while decreasing the other product's price, and the latter effect is greater than the former one. Such a price adjustment is strengthened if a demand shock to one product negatively affects the other product's demand. By contrast, if a positive demand shock affects both products, it decreases both prices, providing a rational explanation for price falls during demand peaks.

Suggested Citation

  • Yuta Kittaka, 2026. "Multiproduct Firms, Consumer Search, and Demand Heterogeneity," Journal of Industrial Economics, Wiley Blackwell, vol. 74(1), pages 48-59, March.
    • Handle: RePEc:bla:jindec:v:74:y:2026:i:1:p:48-59
    DOI: 10.1111/joie.70012
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