Download or read book Consumer Search and Price Competition written by Michael Choi and published by . This book was released on 2016 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: We consider an oligopoly model in which consumers engage in sequential search based on partial product information and advertised prices. We derive a simple condition that fully summarizes consumers' shopping outcomes and use the condition to reformulate the pricing game among the sellers as a familiar discrete-choice problem. Exploiting the reformulation, we provide sufficient conditions that guarantee the existence and uniqueness of pure-strategy market equilibrium and obtain several novel insights about the effects of search frictions on market prices. Among others, we show that a reduction in search costs increases market prices, but providing more pre-search information raises market prices if and only if there are sufficiently many sellers.
Download or read book Inflation Price Competition and Consumer Search Technology written by Makoto Watanabe and published by . This book was released on 2014 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies an (S, s) pricing model from the perspective of inflation and price competition in search markets. I present a model in which consumers' search technologies can influence firms' price setting, price dispersion, and the market structure. The result shows that although price competition among firms is more intensified in markets where consumers' search technologies are more efficient, price inflation is counter-intuitively, more likely to increase monopoly power of firms and to stimulate entry in these markets. The model also provides new empirical implications for firms' price setting behaviors.
Download or read book Consumer Search Behavior and Its Effect on Markets written by Brian T. Ratchford and published by Now Publishers Inc. This book was released on 2009 with total page 89 pages. Available in PDF, EPUB and Kindle. Book excerpt: Consumer Search Behavior and its Effect on Markets focuses on the consumer side of the market, on what is known about how consumers search for needed information, and on how this impacts the behavior of markets. The author discusses three broad strands of this literature -- normative models of search and their application to consumer search; empirical studies of the search process; and implications of consumer search for the behavior of markets, including pricing, advertising and retailing. In general, the author examines external search -- the search for information from sources other than memory. Particular attention is paid to the impact of the Internet on markets. Consumer Search Behavior and its Effect on Markets also examines the broader issues about alternatives considered, sources consulted, extent of consumer knowledge, and the impact of these factors on markets and marketing institutions.
Download or read book Essays on Consumer Search Dynamic Competition and Regulation written by Alexei Parakhonyak and published by Rozenberg Publishers. This book was released on 2010 with total page 139 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Understanding the Digital Economy written by Erik Brynjolfsson and published by MIT Press. This book was released on 2002-01-25 with total page 412 pages. Available in PDF, EPUB and Kindle. Book excerpt: The rapid growth of electronic commerce, along with changes in information, computing, and communications, is having a profound effect on the United States economy. President Clinton recently directed the National Economic Council, in consultation with executive branch agencies, to analyze the economic implications of the Internet and electronic commerce domestically and internationally, and to consider new types of data collection and research that could be undertaken by public and private organizations. This book contains work presented at a conference held by executive branch agencies in May 1999 at the Department of Commerce. The goals of the conference were to assess current research on the digital economy, to engage the private sector in developing the research that informs investment and policy decisions, and to promote better understanding of the growth and socioeconomic implications of information technology and electronic commerce. Aspects of the digital economy addressed include macroeconomic assessment, organizational change, small business, access, market structure and competition, and employment and the workforce.
Download or read book Economic Analysis of Search Advertising written by Lizhen Xu Ph. D. and published by . This book was released on 2011 with total page 306 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation performs economic analysis of search advertising from a comprehensive picture of the competition facing advertisers---by incorporating the price competition to endogenously investigate advertisers' bidding incentive, and taking into account consumers' online search and the unique information structure associated with the search advertising format. It consists of three essays based on game-theoretic modeling. The first essay studies the oligopolistic price competition among advertisers placed in different advertising positions, considering distinctive features of consumers' online search behaviors. We find an interesting local-competition pattern in which direct price competition occurs only between advertisers adjacent to each other. The second essay integrates the price competition into the bidding competition and investigates the endogenous bidding incentives of advertisers with different competitive strengths. Surprisingly, we find that an advertising position with a better exposure may not always be profitable for the advertisers with competitive advantage, even if it is cost free. We also show that the bidding outcome might not align with the relative competitive strength. The third essay further considers the effects of organic listing as a competing information source on the sponsored bidding competition and the outcome performances in search advertising. It provides answers to questions such as whether and why advertisers with sufficient exposure from the organic list may still be willing to bid for top sponsored positions, and how the existence of organic listing affects search engine's revenue, consumer surplus, and social welfare.
Download or read book Price directed Search Product Differentiation and Competition written by Martin Obradovits and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Especially in many online markets, consumers can readily observe prices, but may need to further inspect products to assess their suitability. We study the effects of product differentiation and search costs on competition and market outcomes in a tractable model of price-directed consumer search. We find that (i) firms' equilibrium pricing always induces efficient search behavior, (ii) for relatively large product differentiation, welfare distortions still occur because some consumers (may) forgo consumption, and (iii) lower search costs lead to stochastically higher prices, increasing firms' expected profits and decreasing their frequency of sales. Consumer surplus often falls when search costs decrease.
Download or read book Consumer Price Search and Platform Design in Internet Commerce written by Michael Dinerstein and published by . This book was released on 2014 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt: Search frictions can explain why the "law of one price" fails in retail markets and why even firms selling commodity products have pricing power. In online commerce, physical search costs are low, yet price dispersion is common. We use browsing data from eBay to estimate a model of consumer search and price competition when retailers offer homogeneous goods. We find that retail margins are on the order of 10%, and use the model to analyze the design of search rankings. Our model explains most of the effects of a major re-design of eBay's product search, and allows us to identify conditions where narrowing consumer choice sets can be pro-competitive. Finally, we examine a subsequent A/B experiment run by eBay that illustrates the greater difficulties in designing search algorithms for differentiated products, where price is only one of the relevant product attributes.
Download or read book Stochastic Orders written by Moshe Shaked and published by Springer Science & Business Media. This book was released on 2007-04-03 with total page 482 pages. Available in PDF, EPUB and Kindle. Book excerpt: This reference text presents comprehensive coverage of the various notions of stochastic orderings, their closure properties, and their applications. Some of these orderings are routinely used in many applications in economics, finance, insurance, management science, operations research, statistics, and various other fields. And the value of the other notions of stochastic orderings needs further exploration. This book is an ideal reference for those interested in decision making under uncertainty and interested in the analysis of complex stochastic systems. It is suitable as a text for advanced graduate course on stochastic ordering and applications.
Download or read book A Theory of Monopolistic Competition with Imperfect Consumer Information written by Michael Ray Metzger and published by . This book was released on 1979 with total page 214 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Consumer Search and Retail Market Structure written by Andrew Rhodes and published by . This book was released on 2016 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper proposes a framework for studying how consumer search frictions affect retail market structure. In our model single-product firms which supply different products can merge to form a multiproduct firm. Consumers wish to buy multiple products and value the one-stop shopping convenience associated with a multiproduct firm. We find that when the search friction is relatively large all firms are multiproduct in equilibrium. However when the search friction is smaller the equilibrium market structure is asymmetric, with single-product and multiproduct firms coexisting. This asymmetric market structure often leads to the weakest price competition, and is the worst for consumers among all possible market structures. Due to the endogeneity of market structure, a reduction in the search friction can increase market prices and decrease consumer welfare.
Download or read book Search Costs Demand Structure and Long Tail in Electronic Markets written by Anindya Ghose and published by . This book was released on 2014 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: It is well known that the Internet has significantly reduced consumers' search costs online. But relatively little is known about how search costs affect consumer demand structure in online markets. In this paper, we identify the impact of search costs on firm competition and market structure by exploring a unique theoretical insight that search costs create a kink in aggregate demand when firms change prices. The significance of the kink reflects the magnitude of online search costs and the kinked demand function provides information on how search costs affect competition in the online market. Using a dataset collected from Amazon and Barnes & Noble, we find that search costs vary significantly across online retailers. Consumers face low search costs for price information from Amazon.com. It leads to a higher price elasticity when the firm reduces prices than when it increases prices, increasing Amazon's incentive to engage in price competition. On the other hand, consumers face relatively higher search costs for price information from Barnes & Noble. This leads to a lower price elasticity when Barnes & Noble reduces prices than when it increases prices, reducing Barnes & Noble's incentive to engage in price competition. We also find that search costs decrease with the passage of time as the information about price changes dissipates among consumers, leading to increased price elasticity over time. Finally, we highlight that search costs are lower for popular books compared to rare and unpopular books. These findings have implications for the impact of the Internet on the Long Tail phenomenon.
Download or read book Competition Pricing and Product Entry in Markets with Costly Search written by Ilya Morozov and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In the first chapter of this paper, I study how much consumers benefit from new products in markets with information frictions. I analyze new products in the U.S. hard drive market, a market with ample product innovation. Using unique browsing data, I measure the magnitude of two frictions, limited consideration and costly search, and show that both play a crucial role in shaping consumer demand. Omitting these frictions from analysis makes the researcher underestimate consumer surplus from new hard drives, as it appears that consumers do not like the attributes these hard drives offer. Partly eliminating frictions substantially increases consumers' ability to benefit from new hard drives. In the second chapter, I study the estimation of preference heterogeneity in markets where consumers engage in costly search to learn product characteristics. Costly search amplifies the way consumer preferences translate into purchase probabilities, generating a seemingly large degree of preference heterogeneity. We develop a search model that allows for flexible heterogeneity in preferences and estimate its parameters using a unique panel dataset on the search and purchase behavior of consumers. The estimation results reveal that when search costs are ignored, the model overestimates standard deviations of product intercepts by 68%. We show that the bias in heterogeneity estimates leads to incorrect inference about price elasticities and seller markups and has important consequences for targeted marketing.
Download or read book Competition Law and Consumer Protection written by Katalin Judit Cseres and published by Kluwer Law International B.V.. This book was released on 2005-01-01 with total page 466 pages. Available in PDF, EPUB and Kindle. Book excerpt: The assumption that competition law and consumer protection are mutually reinforcing is rarely challenged. The theory seems uncontroversial. However, because a positive interaction between the two is presumed to be self-evident, the frequent conflicts that do in fact arise are often dealt with on an ad hoc basis, with no overarching legal authority. There is a clear need for a detailed and coherent understanding of exactly where the complements and tensions between the two policy areas exist. Dr Cseres in-depth analysis provides that understanding. Proceeding from the dual perspective of law and economics that is, of justice, fairness, and reasonableness on the one hand, and of efficiency of the other she fully considers such underlying issues as the following: the role of competition law and consumer law in a free market economy;the notion of consumer welfare;the effect of the modernisation of EC competition law for consumers;economics theories of information, bounded rationality, and transaction costs;the special significance of vertical agreements and merger control; and,how consumers are affected by information asymmetries. The ultimate focus of the book is on current and emerging EC law, in which a rapprochement between the two areas seems to be under way. Dr. Cseres provides a knowledgeable guide to the various strands of theory, policy, and jurisprudence that (she shows) ought to be taken into account in the process, including schools of thought and law and policy experience in both Europe and the United States. A special chapter on Hungary, where post-1989 law and practice reveal a fresh and distinctly forward-looking understanding of the matter, is one of the book's most extraordinary features. Competition Law and Consumer Protection stands alone as a committed contribution to bridging a gap in legal knowledge the significance of which grows daily. It will be of immeasurable value to a wide range of professionals from academics and researchers to officials, policymakers, and practitioners in competition law, consumer protection advocacy, economic theory and planning, business administration, and various pertinent government authorities.
Download or read book A Model of Price Promotions with Consumer Search written by Jeffrey Banks and published by . This book was released on 2000 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper presents a price discrimination model of price promotions with consumer search. There are two types of consumers differing in their reservation prices, and the consumers with the higher reservation price incur costs in searching for promotions. We consider two variants of the model, one where the seller is a monopolist in both segments of the market, and the other where the seller faces competition in the low reservation price segment. In equilibrium, consumers search decisions are based on their correct expectations about the frequency and depth of promotions, and the firm(s) promotional strategy correctly anticipates the search behavior it will generate. We show that even a monopolist will find it optimal to randomize his promotions in order to price discriminate more efficiently. With competition in the promotional market, the seller becomes more aggressive in his promotional policies, even more so as search costs increase. But the high reservation price consumers end up worse off compared to the monopoly. By distinguishing explicitly between promotions and regular prices, our approach provides a way to build a theory of the choice of promotion vehicles (e.g., coupons, mail-in-rebates, and shelf-price reductions).
Download or read book Non Reservation Price Equilibria and Consumer Search written by Maarten C. W. Janssen and published by . This book was released on 2014 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: When consumers do not know the prices at which different firms sell, they often also do not know production costs. Consumer search models which take asymmetric information about production costs into account continue focusing on reservation price equilibria (RPE) and their properties. We argue that RPE assume specific out-of-equilibrium beliefs that are not consistent with the logic of the D1 refinement criterion. Moreover, RPE suffer from a non-existence problem as they typically do not exist when cost uncertainty is large. We characterize an alternative class of socalled non-RPE. We show these equilibria always exist and do not rely on specific out-of-equilibrium beliefs. Non-reservation equilibria are characterized by active consumer search among consumers. As cost uncertainty facilitates search, more consumers make price comparisons resulting in stronger price competition between firms and higher consumer surplus.
Download or read book New Economy New Competition written by D. Asch and published by Springer. This book was released on 2001-01-25 with total page 170 pages. Available in PDF, EPUB and Kindle. Book excerpt: The new economy has given rise to new forms of competition. This book provides a rich mix of theory, evidence and management practice that will be invaluable to directors and managers who want to bring their companies closer to their customers. The author considers competition, the roles of consumers, and legislative and regulatory authorities. The book concludes by considering the impact of the revolution in information and communication technologies and shows how a number of key companies have adapted their strategies to meet the demands of their increasingly informed and empowered consumers.
