Consumer Search with Price Sorting

Yuxin Chen (), Sanxi Li () and Jun Yu ()
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Yuxin Chen: NYU Shanghai
Sanxi Li: School of Economics, Renmin University of China
Jun Yu: School of Economics, Shanghai University of Finance and Economics

Annals of Economics and Finance, 2024, vol. 25, issue 2, 363-421

Abstract: This article considers costly sequential search in an online-shopping platform in which either ascending or descending price sorting can be applied prior to the search process. Our model generates price dispersion in the unique symmetric equilibrium for each type of price sorting. Moreover, we show that consumers choose ascending/descending price sorting when the proportion of high-quality firms is high/low. Finally, when search costs are small, the availability of price sorting improves consumer surplus but has no impact on industry profit.

Keywords: Consumer search; Product differentiation; Sorting; Search accuracy; Price dispersion (search for similar items in EconPapers)
JEL-codes: D43 D83 L13 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:cuf:journl:y:2024:v:25:i:2:chenliyu

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