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Competing for Consumer Inattention

Author

Listed:
  • de Clippel, Geoffroy
  • Eliaz, Kfir
  • Rozen, Kareen

Abstract

Consumers purchase multiple types of goods, but may be able to examine only a limited number of markets for the best price. We propose a simple model which captures these features, conveying new insights. A rm's price can de ect or draw attention to its market, and consequently, limited attention introduces a new dimension of cross-market competition. We characterize the equilibrium, and show that having partially attentive consumers improves consumer welfare. With less attention, consumers are more likely to miss the best oers; but enhanced cross-market competition decreases average price paid, as leading rms try to stay under the consumers' radar.

Suggested Citation

  • de Clippel, Geoffroy & Eliaz, Kfir & Rozen, Kareen, 2014. "Competing for Consumer Inattention," Foerder Institute for Economic Research Working Papers 275830, Tel-Aviv University > Foerder Institute for Economic Research.
  • Handle: RePEc:ags:isfiwp:275830
    DOI: 10.22004/ag.econ.275830
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    More about this item

    Keywords

    Consumer/Household Economics; Financial Economics;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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