Price Competition Under Limited Comparability
This article studies market competition when firms can influence consumers' ability to compare market alternatives through their choice of price "formats." In our model, the ability of a consumer to make a comparison depends on the firms' format choices. Our main results concern the interaction between firms' equilibrium price and format decisions and its implications for industry profits and consumer switching rates. In particular, market forces drive down the firms' profits to a "constrained competitive" benchmark if and only if the comparability structure satisfies a property that we interpret as a form of "frame neutrality." The same property is necessary for equilibrium behavior to display statistical independence between price and format decisions. We also show that narrow regulatory interventions that aim to facilitate comparisons may have an anticompetitive effect. Copyright 2012, Oxford University Press.
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): 127 (2012)
Issue (Month): 1 ()
|Contact details of provider:|| |
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Xavier Gabaix & David Laibson, 2006.
"Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets,"
The Quarterly Journal of Economics,
MIT Press, vol. 121(2), pages 505-540, May.
- Xavier Gabaix & David Laibson, 2005. "Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets," NBER Working Papers 11755, National Bureau of Economic Research, Inc.
- Laibson, David I. & Gabaix, Xavier, 2006. "Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets," Scholarly Articles 4554333, Harvard University Department of Economics.
- Wilson, Chris M., 2010.
"Ordered search and equilibrium obfuscation,"
International Journal of Industrial Organization,
Elsevier, vol. 28(5), pages 496-506, September.
- Ran Spiegler, 2005.
"Competition over Agents with Boundedly Rational Expectations,"
122247000000000535, UCLA Department of Economics.
- Spiegler, Ran, 2006. "Competition over agents with boundedly rational expectations," Theoretical Economics, Econometric Society, vol. 1(2), pages 207-231, June.
- Ran Spiegler, 2006.
"The Market for Quacks,"
Review of Economic Studies,
Oxford University Press, vol. 73(4), pages 1113-1131.
- Rubenstein, A., 1991.
"On Price Recognition and Computational Complexity in a Monopolistic Model,"
35-91, Tel Aviv.
- Rubinstein, Ariel, 1993. "On Price Recognition and Computational Complexity in a Monopolistic Model," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 473-84, June.
- Glenn Ellison & Alexander Wolitzky, 2012.
"A search cost model of obfuscation,"
RAND Journal of Economics,
RAND Corporation, vol. 43(3), pages 417-441, 09.
- Michele Piccione & Ariel Rubinstein, 2003.
"Modeling the Economic Interaction of Agents With Diverse Abilities to Recognize Equilibrium Patterns,"
Journal of the European Economic Association,
MIT Press, vol. 1(1), pages 212-223, 03.
- Michele Piccione & Ariel Rubinstein, 2010. "Modeling the Economic Interaction of Agents with Diverse Abilities to Recognize Equilibrium Patterns," Levine's Working Paper Archive 506439000000000108, David K. Levine.
- Michele Piccione & Ariel Rubinstein, 2002. "Modelling the Economic Interaction of Agents with Diverse Abilities to Recognise Equilibrium Patterns," STICERD - Theoretical Economics Paper Series 440, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Michele Piccione & Ariel Rubinstein, 2002. "Modelling the economic interaction of agents with diverse abilities to recognise equilibrium patterns," LSE Research Online Documents on Economics 2061, London School of Economics and Political Science, LSE Library.
- Kfir Eliaz & Ran Spiegler, 2011.
"Consideration Sets and Competitive Marketing,"
Review of Economic Studies,
Oxford University Press, vol. 78(1), pages 235-262.
- Eliaz, Kfir & Spiegler, Ran, 2006. "Consideration Sets and Competitive Marketing," MPRA Paper 21434, University Library of Munich, Germany, revised 03 Sep 2009.
- Eliaz, Kfir & Spiegler, Ran, 2009. "Consideration Sets and Competitive Marketing," CEPR Discussion Papers 7456, C.E.P.R. Discussion Papers.
- Eliaz, Kfir & Spiegler, Ran, 2008. "Consumer optimism and price discrimination," Theoretical Economics, Econometric Society, vol. 3(4), December.
- Varian, Hal R, 1980. "A Model of Sales," American Economic Review, American Economic Association, vol. 70(4), pages 651-59, September.
When requesting a correction, please mention this item's handle: RePEc:oup:qjecon:v:127:y:2012:i:1:p:97-135. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press)or (Christopher F. Baum)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.