Sources of Limited Consideration and Market Power in E-Commerce

Michael Rolland Sullivan

American Economic Journal: Microeconomics, 2026, vol. 18, issue 1, 1-29

Abstract: This article develops techniques for the empirical analysis of repeated sequential search over unordered alternatives using data on consumer search processes. I use these techniques to assess why consumers conduct little search in e-commerce and often pay significantly above the minimum available price for a product. Search costs could explain these facts, as could pre-search seller differentiation: Consumers with low search costs may not visit stores they dislike based on information known before search. I find that seller differentiation is primarily responsible for limited consideration and market power.

JEL-codes: D11 D21 D43 D83 L81 (search for similar items in EconPapers)
Date: 2026
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DOI: 10.1257/mic.20230200

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