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Multiproduct search obfuscation

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  • Hämäläinen, Saara

Abstract

We introduce a new price competition model of search for a single product among multiproduct firms. Search order is optimal within and across firms. Consumers have limited time and require a random time to sample a product. Different search outcomes lead to price dispersion. We describe a symmetric mixed equilibrium where multiproduct firms provide discounted prices on some products and expensive prices on others. Compared to single-product oligopolies, this strategy alleviates competition by (i) engaging consumers in searching more within (less across) firms and (ii) enabling more refined price discrimination.

Suggested Citation

  • Hämäläinen, Saara, 2022. "Multiproduct search obfuscation," International Journal of Industrial Organization, Elsevier, vol. 85(C).
    • Handle: RePEc:eee:indorg:v:85:y:2022:i:c:s016771872200039x
    DOI: 10.1016/j.ijindorg.2022.102863
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    More about this item

    Keywords

    Search; Multiproduct firms; Obfuscation; Substitutes; Comparison shopping; Intrafirm search frictions; Intrafirm price dispersion; Intrafirm quality variation;
    All these keywords.

    JEL classification:

    • 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

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