Ordered search in differentiated markets |
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| Authors: | Jidong Zhou |
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| Institution: | Department of Economics, University College London, Gower Street, London WC1E 6BT, UK |
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| Abstract: | This paper presents an ordered search model in which consumers search both for price and product fitness. I construct an equilibrium in which there is price dispersion and prices rise in the order of search. The top firms in consumer search process, though charge lower prices, earn higher profits due to their larger market shares. Compared to random search, ordered search can induce all firms to charge higher prices and harm market efficiency. |
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| Keywords: | D43 D83 L13 |
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