Competing for Consumer Inattention

Geoffroy de Clippel, Kfir Elias and Kareen Rozen ()
Additional contact information
Kfir Elias: Tel Aviv University & University of Michigan, Ann Arbor

No 1901, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

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; Price competition; Multiple markets (search for similar items in EconPapers)
JEL-codes: D03 D04 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2013-07
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 (3)

Published in Journal of Political Economy (December 2014), 122(6): 1203-1234

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