Returns to Consumer Search: Evidence from eBay

Thomas Blake, Chris Nosko and Steven Tadelis

No 22302, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: A growing body of empirical literature finds that consumers are relatively limited in how much they search over product characteristics. We assemble a dataset of search and purchase behavior from eBay to quantify the returns, and thus implied costs, to consumer search on the internet. The extensive nature of the eBay data allows us to examine a rich and detailed set of questions related to search in a way that previous structural models cannot. In contrast to the literature, we find that consumers search a lot: on average 36 times per purchase over 3 (distinct) days, with most sessions ending in no purchase. We find that search costs are relatively low, in the region of 25 cents per search page. We pursue the analysis further by, i) examining how users refine their search, ii) how search behavior spans multiple search sessions, and iii) how the amount of search relates to finding lower prices.

JEL-codes: D43 D83 L13 (search for similar items in EconPapers)
Date: 2016-06
New Economics Papers: this item is included in nep-com and nep-mkt
Note: IO PR
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Citations: View citations in EconPapers (10)

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