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Competing for Consumer Inattention

Kfir Eliaz, Geoffroy de Clippel and Kareen Rozen (kareen_rozen@brown.edu)

No 9553, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Consumers purchase multiple types of goods and services, but may be able to examine only a limited number of markets for the best price. We propose a simple model which captures these features, conveying some new insights. A firm's price can deflect or draw attention to its market, and consequently, limited attention introduces a new dimension of competition across markets. We fully characterize the resulting equilibrium, and show that the presence of partially attentive consumers improves consumer welfare as a whole. When consumers are less attentive, they are more likely to miss the best offer in each market; but the enhanced cross-market competition decreases average price paid, as leading firms try to stay under the consumers' radar.

Keywords: Limited; attention (search for similar items in EconPapers)
JEL-codes: C72 D43 (search for similar items in EconPapers)
Date: 2013-07
New Economics Papers: this item is included in nep-com, nep-gth, nep-mic and nep-mkt
References: Add references at CitEc
Citations: View citations in EconPapers (13)

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Related works:
Journal Article: Competing for Consumer Inattention (2014) Downloads
Working Paper: Competing for Consumer Inattention (2014) Downloads
Working Paper: Competing for Consumer Inattention (2013) Downloads
Working Paper: Competing for Consumer Inattention (2013) Downloads
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