Price Competition under Limited Comparability

Michele Piccione and Ran Spiegler ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper studies market competition when firms can influence consumers' ability to compare market alternatives, through their choice of price "formats". We introduce random graphs as a tool for modelling limited comparability of formats. Our main results concern the interaction between firms' equilibrium price and format decisions and its implications for industry profits and consumer switching rates. We show that narrow regulatory interventions that aim to facilitate comparisons may have adverse consequences for consumer welfare. Finally, we argue that our limited-comparability approach provides a new perspective into the phenomenon of product differentiation.

Keywords: price competition; industrial organization; limited comparability; bounded rationality; framing; consumer protection; product differentiation; complexity (search for similar items in EconPapers)
JEL-codes: C79 D03 D18 D43 L13 (search for similar items in EconPapers)
Date: 2009-05-04, Revised 2009-10-16
New Economics Papers: this item is included in nep-com, nep-mic, nep-mkt and nep-reg
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https://mpra.ub.uni-muenchen.de/21427/1/MPRA_paper_21427.pdf original version (application/pdf)

Related works:
Journal Article: Price Competition Under Limited Comparability (2012)
Working Paper: Price Competition under Limited Comparability (2011)
Working Paper: Price Competition under Limited Comparability (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:21427

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