Multiproduct search obfuscation

Saara Hämäläinen

International Journal of Industrial Organization, 2022, vol. 85, issue C

Abstract: We introduce a new price competition model of search for a single product among multiproduct firms. Search order is optimal within and across firms. Consumers have limited time and require a random time to sample a product. Different search outcomes lead to price dispersion. We describe a symmetric mixed equilibrium where multiproduct firms provide discounted prices on some products and expensive prices on others. Compared to single-product oligopolies, this strategy alleviates competition by (i) engaging consumers in searching more within (less across) firms and (ii) enabling more refined price discrimination.

Keywords: Search; Multiproduct firms; Obfuscation; Substitutes; Comparison shopping; Intrafirm search frictions; Intrafirm price dispersion; Intrafirm quality variation (search for similar items in EconPapers)
JEL-codes: D43 D83 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:85:y:2022:i:c:s016771872200039x

DOI: 10.1016/j.ijindorg.2022.102863

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