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Ordered Consumer Search

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  • Armstrong, Mark

Abstract

The paper discusses situations in which consumers search through their options in a deliberate order, in contrast to more familiar models with random search. Topics include: network effects (consumers may be better off following the same search order as other consumers); the use of price and non-price advertising to direct search; the impact of consumers starting a new search with their previous supplier; the incentive sellers have to merge or co-locate with other sellers; and the incentive a seller can have to raise its own search cost. I also show how ordered search can be reformulated as a simpler discrete choice problem without search frictions.

Suggested Citation

  • Armstrong, Mark, 2016. "Ordered Consumer Search," MPRA Paper 72194, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:72194
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    References listed on IDEAS

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    Cited by:

    1. repec:eee:indorg:v:58:y:2018:i:c:p:236-251 is not listed on IDEAS
    2. Alexei Parakhonyak & Maria Titova, 2016. "Shopping Malls, Platforms and Consumer Search," Economics Series Working Papers 807, University of Oxford, Department of Economics.
    3. Anna Airoldi & Michele Polo, 2017. "Opening the Retail Electricity Markets: Puzzles, Drawbacks and Policy Options," IEFE Working Papers 97, IEFE, Center for Research on Energy and Environmental Economics and Policy, Universita' Bocconi, Milano, Italy.

    More about this item

    Keywords

    Consumer search; sequential search; ordered search; directed search; discrete choice; oligopoly; advertising; obfuscation.;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • 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
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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