IDEAS home Printed from https://ideas.repec.org/p/ags/uwarer/269563.html

Consumers and Competition

Author

Listed:
  • Waterson, Michael

Abstract

This paper shows that even if all consumers face search costs, if these are below a certain level dependent upon the firm numbers and demand elasticity, the Diamond-type equilibrium with all prices at the monopoly level fails to exist.

Suggested Citation

  • Waterson, Michael, "undated". "Consumers and Competition," Economic Research Papers 269563, University of Warwick - Department of Economics.
    • Handle: RePEc:ags:uwarer:269563
    DOI: 10.22004/ag.econ.269563
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/269563/files/twerp679.pdf
    Download Restriction: no
    File URL: https://ageconsearch.umn.edu/record/269563/files/twerp679.pdf?subformat=pdfa
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.269563?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Simon P. Anderson & Regis Renault, 1999. "Pricing, Product Diversity, and Search Costs: A Bertrand-Chamberlin-Diamond Model," RAND Journal of Economics, The RAND Corporation, vol. 30(4), pages 719-735, Winter.
    2. Hehenkamp, Burkhard, 2002. "Sluggish Consumers: An Evolutionary Solution to the Bertrand Paradox," Games and Economic Behavior, Elsevier, vol. 40(1), pages 44-76, July.
    3. Diamond, Peter A., 1971. "A model of price adjustment," Journal of Economic Theory, Elsevier, vol. 3(2), pages 156-168, June.
    4. Domberger, Simon & Sherr, Avrom, 1989. "The impact of competition on pricing and quality of legal services," International Review of Law and Economics, Elsevier, vol. 9(1), pages 41-56, June.
    5. Stahl, Dale O, II, 1989. "Oligopolistic Pricing with Sequential Consumer Search," American Economic Review, American Economic Association, vol. 79(4), pages 700-712, September.
    6. Rees, Ray, 1993. "Collusive Equilibrium in the Great Salt Duopoly," Economic Journal, Royal Economic Society, vol. 103(419), pages 833-848, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alexandre de Corniere, 2013. "Search Advertising," Economics Series Working Papers 649, University of Oxford, Department of Economics.
    2. Armstrong, Mark & Zhou, Jidong, 2010. "Exploding offers and buy-now discounts," MPRA Paper 22531, University Library of Munich, Germany.
    3. Gamp, Tobias & Krähmer, Daniel, 2022. "Biased Beliefs in Search Markets," Rationality and Competition Discussion Paper Series 365, CRC TRR 190 Rationality and Competition.
    4. Huanxing Yang, 2013. "Targeted search and the long tail effect," RAND Journal of Economics, RAND Corporation, vol. 44(4), pages 733-756, December.
    5. Sarah Auster & Nenad Kos & Salvatore Piccolo, 2021. "Optimal Pricing, Private Information and Search For an Outside Offer," CRC TR 224 Discussion Paper Series crctr224_2021_151v2, University of Bonn and University of Mannheim, Germany.
    6. Carvalho, M., 2009. "Price Recall, Bertrand Paradox and Price Dispersion With Elastic Demand," Discussion Paper 2009-69, Tilburg University, Center for Economic Research.
    7. Daniel Garcia & Jun Honda & Maarten Janssen, 2017. "The Double Diamond Paradox," American Economic Journal: Microeconomics, American Economic Association, vol. 9(3), pages 63-99, August.
    8. Andrew Rhodes & Jidong Zhou, 2019. "Consumer Search and Retail Market Structure," Management Science, INFORMS, vol. 67(6), pages 2607-2623, June.
    9. Fishman, Arthur, 2021. "Finitely repeated search and the diamond paradox," Economics Letters, Elsevier, vol. 205(C).
    10. Michael R. Galbreth & Bikram Ghosh, 2020. "The effect of exogenous product familiarity on endogenous consumer search," Quantitative Marketing and Economics (QME), Springer, vol. 18(2), pages 195-235, June.
    11. Alexandre de Cornière, 2009. "Targeted advertising with consumer search: an economic analysis of keywords advertising," Working Papers halshs-00575074, HAL.
    12. Carvalho, M., 2009. "Price Recall, Bertrand Paradox and Price Dispersion With Elastic Demand," Other publications TiSEM c00b849b-641f-43ed-a493-3, Tilburg University, School of Economics and Management.
    13. Dongjin Hwang & Ilwoo Hwang, 2025. "Competitive Information Disclosure with Heterogeneous Consumer Search," Papers 2504.04659, arXiv.org, revised Jul 2025.
    14. Obradovits, Martin, 2017. "Search and segregation," International Journal of Industrial Organization, Elsevier, vol. 55(C), pages 137-165.
    15. Alexandre de Cornière, 2016. "Search Advertising," American Economic Journal: Microeconomics, American Economic Association, vol. 8(3), pages 156-188, August.
    16. Michael Choi & Guillaume Rocheteau, 2024. "Information acquisition and price discrimination in dynamic, decentralized markets," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 53, pages 1-46, July.
    17. Alexei Parakhonyak & Anton Sobolev, 2015. "Non‐Reservation Price Equilibrium and Search without Priors," Economic Journal, Royal Economic Society, vol. 0(584), pages 887-909, May.
    18. Gamp, Tobias & Krähmer, Daniel, 2022. "Competition in Search Markets with Naive Consumers," Rationality and Competition Discussion Paper Series 364, CRC TRR 190 Rationality and Competition.
    19. Simon P. Anderson & André De Palma, 2009. "Information congestion," RAND Journal of Economics, RAND Corporation, vol. 40(4), pages 688-709, December.
    20. Brynjolfsson, Erik & Dick, Astrid Andrea & Smith, Michael D., 2004. "Search and Product Differentiation at an Internet Shopbot," Working papers 4441-03, Massachusetts Institute of Technology (MIT), Sloan School of Management.

    More about this item

    Keywords

    ;
    ;

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:uwarer:269563. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://warwick.ac.uk/fac/soc/economics/research/workingpapers/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.