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Coasian Dynamics in Sequential Search

Author

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  • Mauring, Eeva
  • Williams, Cole

Abstract

Consumer-tracking technology offers new tools for price discrimination in digital markets. We examine the impact of sellers using this technology to adjust prices according to a buyer’s prior search length in a competitive search market where buyers differ in their patience. We find a “Coasian equilibrium†wherein sellers reduce prices for buyers with longer search lengths which in turn requires them to reduce prices for buyers with shorter search lengths. There is a Coasian equilibrium that not only yields higher welfare for every buyer than all uniform-pricing equilibria, but is also the unique symmetric equilibrium when some mass of buyers are arbitrarily patient.

Suggested Citation

  • Mauring, Eeva & Williams, Cole, 2023. "Coasian Dynamics in Sequential Search," CEPR Discussion Papers 17907, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:17907
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    More about this item

    Keywords

    Coase conjecture; Sequential search; Price discrimination;
    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
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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