Nonsequential search equilibrium with search cost heterogeneity

Jose Moraga-Gonzalez, Zsolt Sándor and Matthijs Wildenbeest

International Journal of Industrial Organization, 2017, vol. 50, issue C, 392-414

Abstract: We generalize the model of Burdett and Judd (1983) to the case where an arbitrary finite number of firms sells a homogeneous good to buyers who have heterogeneous search costs. We show that a price dispersed symmetric Nash equilibrium always exists. Numerical results show that the behavior of prices and consumer surplus with respect to the number of firms hinges upon the nature of search cost dispersion: when search costs are relatively concentrated, entry of firms leads to lower average prices and greater consumer surplus; however, for relatively dispersed search costs, the mean price goes up and consumer surplus may decrease with the number of firms.

Keywords: Nonsequential search; Entry; Oligopoly; Arbitrary search cost distributions (search for similar items in EconPapers)
JEL-codes: C72 D43 D83 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Related works:
Working Paper: Nonsequential search equilibrium with search cost heterogeneity (2010)
Working Paper: Nonsequential Search Equilibrium with Search Cost Heterogeneity (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:50:y:2017:i:c:p:392-414

DOI: 10.1016/j.ijindorg.2016.06.009

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