A Model of Directed Consumer Search

Moraga-González, José-Luis, Marco Haan and Vaiva Petrikaite
Authors registered in the RePEc Author Service: Jose Luis Moraga-Gonzalez

No 11955, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We present a framework to study directed consumer search. Firms sell products with two attributes. One is readily observable, the other only after visiting a firm. Search is directed as the order of search is influenced by the observable characteristics. Moreover, if prices are readily observable, firms also influence search direction by their choice of price. We show that when consumers observe prices before search, prices and profits are lower than when they do not. A lower price then not only retains more consumers, but is also more likely to attract them; the latter effect makes demand more elastic. When prices are observable before search, prices decrease in search costs. Consumer surplus initially increases in search costs, but may ultimately decrease.

Keywords: Ordered/directed search; Price observability; Differentiated products (search for similar items in EconPapers)
JEL-codes: D83 L13 (search for similar items in EconPapers)
Date: 2017-04
New Economics Papers: this item is included in nep-com, nep-mic and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://cepr.org/publications/DP11955 (application/pdf)

Related works:
Journal Article: A model of directed consumer search (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:11955

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP11955

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().