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Ordered search and equilibrium obfuscation

  • Wilson, Chris M.

This paper demonstrates the incentives for an oligopolist to obfuscate by deliberately increasing the cost with which consumers can locate its product and price. Consumers are allowed to choose the optimal order in which to search firms and firms are able to influence this order through their choice of search costs and prices. Competition does not ensure market transparency -- equilibrium search costs are positive and asymmetric across firms. Intuitively, an obfuscating firm can soften the competition for consumers with low time costs by inducing the remaining consumers to optimally first search its rival.

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File URL: http://www.sciencedirect.com/science/article/pii/S0167-7187(09)00126-X
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Article provided by Elsevier in its journal International Journal of Industrial Organization.

Volume (Year): 28 (2010)
Issue (Month): 5 (September)
Pages: 496-506

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Handle: RePEc:eee:indorg:v:28:y:2010:i:5:p:496-506
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505551

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