The Effect of Price Dispersion on Cost of Living Indexes
Single good search models imply that mean-preserving increases in the amount of price dispersion reduce expected costs of living of searching consumers. Yet when many goods are consumed, commodity substitution may create a de facto form of fixed sample size search. This leads to the paradoxical result that an increase in price dispersion may reduce nonsearchers' average costs of living more than it does searchers' even--in the fixed sample size search case--if the searchers search only a little. Moreover, mean-and-support-preserving increases in price dispersion may make it optimal to forgo fixed sample size search. Copyright 1994 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 35 (1994)
Issue (Month): 1 (February)
|Contact details of provider:|| Postal: 160 McNeil Building, 3718 Locust Walk, Philadelphia, PA 19104-6297|
Phone: (215) 898-8487
Fax: (215) 573-2057
Web page: http://www.econ.upenn.edu/ier
More information through EDIRC
|Order Information:|| Web: http://www.blackwellpublishing.com/subs.asp?ref=0020-6598 Email: |