Consumer Search and Information Intermediaries

Moez Bennouri (), Robert Clark and Jacques Robert ()
Additional contact information
Jacques Robert: TI, HEC Montréal, http://www.hec.ca/ti/index.html

No 07-01, Cahiers de recherche from HEC Montréal, Institut d'économie appliquée

Abstract: In this paper we model the market for a homogeneous good and examine the role of information in determining market outcomes. Unlike in Baye and Morgan (2001) where consumers can only learn about the prices charged by different firms by subscribing to an information intermediary’s service, we allow consumers to shop for price quotes. We are interested in determing the impact on market outcomes of allowing for this additional means of information acquisition. Relative to the case where consumers have no interest in searching for prices, consumers become no better off as the cost of search falls. The intermediary, in an effort to compensate for the loss of revenue that it might have earned from consumers, increases the fees that it charges to firms for the right to advertise their product through it. As a result, fewer firms advertise in equilibrium, and so, those that do post higher prices, and, in expectation, consumers pay more for the product. The price increase appropriates all of the gains in consumer surplus generated by the decrease in the cost of search.

Keywords: Search; advertising; information intermediary; price dispersion (search for similar items in EconPapers)
Pages: 35 pages
Date: 2007-01
New Economics Papers: this item is included in nep-com, nep-mic and nep-mkt
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.hec.ca/iea/cahiers/2007/iea0701_rclark.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iea:carech:0701

Ordering information: This working paper can be ordered from
Institut d'économie appliquée HEC Montréal 3000, Chemin de la Côte-Sainte-Catherine Montréal, Québec H3T 2A7

The price is Free.

Access Statistics for this paper

More papers in Cahiers de recherche from HEC Montréal, Institut d'économie appliquée Institut d'économie appliquée HEC Montréal 3000, Chemin de la Côte-Sainte-Catherine Montréal, Québec H3T 2A7. Contact information at EDIRC.
Bibliographic data for series maintained by Patricia Power ().