Partial sequential search and product differentiation

Lin Liu and X. Wang ()

Economics Letters, 2023, vol. 225, issue C

Abstract: Anderson and Renault (1999) show that when search cost is needed to evaluate any product, a U-shaped relationship exists between equilibrium price and product differentiation. This paper revisits this relationship by incorporating partial-depth search in a sequential search process which allows consumers to evaluate a subset of product attributes. We show that, when search depth is endogenous, the relationship is either always positive or N-shaped, depending on the elasticity of the hazard rate function of utility distribution.

Keywords: Consumer search; Partial-depth search; Product differentiation; Pricing (search for similar items in EconPapers)
JEL-codes: D11 D43 D83 L13 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:225:y:2023:i:c:s0165176523000915

DOI: 10.1016/j.econlet.2023.111066

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