This paper presents a sequential search model where consumers look for several products among competitive multiproduct �rms. In a multiproduct search mar- ket, both consumer behavior and �rm behavior exhibit di¤erent features from the single-product case: a consumer often returns to previously visited �rms before running out of options; and prices can decrease with search costs and increase with the number of �rms. The framework is then extended in two directions. First, by introducing both single-product and multiproduct searchers, the model can explain the phenomenon of countercyclical pricing, i.e., prices of many retail products decline during peak-demand periods. Second, by allowing �rms to use bundling strategies, the model sheds new light on how bundling a¤ects market performance. In a search environment, bundling tends to reduce consumer search intensity, which can soften competition and reverse the usual welfare assessment of competitive bundling in a perfect information setting.
|Date of creation:||31 Nov 2011|
|Date of revision:|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
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.:
- Barry Nalebuff, 2004. "Bundling as an Entry Barrier," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 159-187.
- MacDonald, James M, 2000. "Demand, Information, and Competition: Why Do Food Prices Fall at Seasonal Demand Peaks?," Journal of Industrial Economics, Wiley Blackwell, vol. 48(1), pages 27-45, March.
- Weitzman, Martin L, 1979.
"Optimal Search for the Best Alternative,"
Econometric Society, vol. 47(3), pages 641-54, May.
- John Thanassoulis, 2006.
"Competitive Mixed Bundling and Consumer Surplus,"
Economics Series Working Papers
263, University of Oxford, Department of Economics.
- Burdett, Kenneth & Malueg, David A., 1981. "The theory of search for several goods," Journal of Economic Theory, Elsevier, vol. 24(3), pages 362-376, June.
- Giovanni L. Violante & Fatih Guvenen & Bulent Guler, 2008.
"Joint-Search Theory: New Opportunities and New Frictions,"
2008 Meeting Papers
856, Society for Economic Dynamics.
- Guler, Bulent & Guvenen, Fatih & Violante, Giovanni L., 2012. "Joint-search theory: New opportunities and new frictions," Journal of Monetary Economics, Elsevier, vol. 59(4), pages 352-369.
- Bulent Guler & Fatih Guvenen & Giovanni L. Violante, 2009. "Joint-Search Theory: New Opportunities and New Frictions," NBER Working Papers 15011, National Bureau of Economic Research, Inc.
- Bulent Guler & Fatih Guvenen & Giovanni L. Violante, 2009. "Joint-search theory: new opportunities and new frictions," Staff Report 426, Federal Reserve Bank of Minneapolis.
- Matutes, Carmen & Regibeau, Pierre, 1992. "Compatibility and Bundling of Complementary Goods in a Duopoly," Journal of Industrial Economics, Wiley Blackwell, vol. 40(1), pages 37-54, March.
- Anderson, S.P. & Renault, R., 1997.
"Pricing, Product Diversity and Search Costs: A Bertrand-Chamberlin-Diamond Model,"
97.481, Toulouse - GREMAQ.
- 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.
- Simon P. Anderson & Regis Renault, 1999. "Pricing, product diversity, and search costs: a Bertrand-Chamberlin-Diamond model," Virginia Economics Online Papers 335, University of Virginia, Department of Economics.
- Chen, Yongmin, 1997. "Equilibrium Product Bundling," The Journal of Business, University of Chicago Press, vol. 70(1), pages 85-103, January.
- Mark Armstrong & Jidong Zhou, 2011.
"Exploding Offers and Buy-Now Discounts,"
11-18, New York University, Leonard N. Stern School of Business, Department of Economics.
- Mark Armstrong & Jidong Zhou, 2010. "Exploding Offers and Buy-Now Discounts," EERI Research Paper Series EERI_RP_2010_44, Economics and Econometrics Research Institute (EERI), Brussels.
- Armstrong, Mark & Zhou, Jidong, 2010. "Exploding offers and buy-now discounts," MPRA Paper 22531, University Library of Munich, Germany.
- Armstrong, Mark & Zhou, Jidong, 2010. "Exploding offers and buy-now discounts," MPRA Paper 24849, University Library of Munich, Germany.
- Mark Armstrong & Jidong Zhou, 2011. "Exploding Offers and Buy-Now Discounts," Economics Series Working Papers 575, University of Oxford, Department of Economics.
- Rhodes, Andrew, 2011. "Multiproduct pricing and the Diamond Paradox," MPRA Paper 32511, University Library of Munich, Germany.
- McAfee R. Preston, 1995. "Multiproduct Equilibrium Price Dispersion," Journal of Economic Theory, Elsevier, vol. 67(1), pages 83-105, October.
- Elizabeth J. Warner & Robert B. Barsky, 1995. "The Timing and Magnitude of Retail Store Markdowns: Evidence from Weekends and Holidays," The Quarterly Journal of Economics, Oxford University Press, vol. 110(2), pages 321-352.
- Marco A. Haan & José L. Moraga‐González, 2011.
"Advertising for Attention in a Consumer Search Model,"
Royal Economic Society, vol. 121(552), pages 552-579, 05.
- Haan, Marco A. & Moraga-Gonzalez, Jose L., 2009. "Advertising for attention in a consumer search model," IESE Research Papers D/794, IESE Business School.
- Barry Nalebuff, 2000. "Competing Against Bundles," Yale School of Management Working Papers ysm157, Yale School of Management.
- Carlson, John A. & McAfee, R. Preston, 1984. "Joint search for several goods," Journal of Economic Theory, Elsevier, vol. 32(2), pages 337-345, April.
- R. Preston McAfee & John McMillan & Michael D. Whinston, 1989. "Multiproduct Monopoly, Commodity Bundling, and Correlation of Values," The Quarterly Journal of Economics, Oxford University Press, vol. 104(2), pages 371-383.
- Rotemberg, Julio J & Saloner, Garth, 1986. "A Supergame-Theoretic Model of Price Wars during Booms," American Economic Review, American Economic Association, vol. 76(3), pages 390-407, June.
- Shelegia, Sandro, 2012. "Multiproduct pricing in oligopoly," International Journal of Industrial Organization, Elsevier, vol. 30(2), pages 231-242.
- Eugenio J. Miravete, 2002. "Preserving Log-Concavity Under Convolution: Comment," Econometrica, Econometric Society, vol. 70(3), pages 1253-1254, May.
- Carmen Matutes & Pierre Regibeau, 1988. ""Mix and Match": Product Compatibility without Network Externalities," RAND Journal of Economics, The RAND Corporation, vol. 19(2), pages 221-234, Summer.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:37139. 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: (Joachim Winter)
If references are entirely missing, you can add them using this form.