Skimming through search

Rouskas Evangelos ()
Additional contact information
Rouskas Evangelos: Agricultural University of Athens, Athens, Greece

German Economic Review, 2021, vol. 22, issue 2, 129-152

Abstract: I examine a two-period duopolistic market for a durable good where firms compete in prices. Consumers are heterogeneous and can be described according to the following characteristics (i) high valuation and high search intensity; (ii) high valuation and low search intensity; (iii) low valuation and high search intensity; and (iv) low valuation and low search intensity. The market exhibits a new version of the so-called Coasian dynamics. The firms engage in intertemporal price discrimination and only consumers with high valuation and low search intensity purchase the product early. This result is based on a property which dictates that the consumers with high valuation and low search intensity are the most impatient. I call this the skimming through search property. When the difference between the high and the low valuation is small, there is positive probability that the prices in the first period are lower than the prices in the second period, so each firm may set a decreasing sequence of prices in a stochastic sense. Furthermore, when the percentage of consumers with high valuation increases, all consumers pay lower prices. This inter-consumer externality resembles the positive externality caused by an increase in market transparency.

Keywords: search; consumer heterogeneity; intertemporal price discrimination; delay (search for similar items in EconPapers)
JEL-codes: D43 D83 L13 (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1515/ger-2019-1067 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

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:bpj:germec:v:22:y:2021:i:2:p:129-152:n:5

Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/ger/html

DOI: 10.1515/ger-2019-1067

Access Statistics for this article

German Economic Review is currently edited by Peter Egger, Almut Balleer, Jesus Crespo-Cuaresma, Mario Larch, Aderonke Osikominu and Georg Wamser

More articles in German Economic Review from De Gruyter
Bibliographic data for series maintained by Peter Golla ().