An Empirical Investigation of Returns to Search

Brian T. Ratchford and Narasimhan Srinivasan
Additional contact information
Brian T. Ratchford: State University of New York at Buffalo
Narasimhan Srinivasan: University of Connecticut

Marketing Science, 1993, vol. 12, issue 1, 73-87

Abstract: Using data on search and choice behavior from a local automobile market, we estimate monetary returns to search in terms of lower prices resulting from additional time invested in price search. For our analytical framework, we adapt a model developed in the job search literature to the problem of consumer search; this framework is especially useful for illuminating the relationship between time spent searching, the outcome of search, and demand and supply side variables. Our results indicate that, for this particular sample of buyers, marginal returns to search are broadly consistent with what one might expect if consumers balance costs and benefits of search, and that potential gains from additional search for lower car prices do not appear to be large for most consumers. Our study highlights many of the methodological difficulties involved in estimating returns to search, including isolating returns to different outcomes of search, and sensitivity of results to model specification and sampling error. We deal with these problems by trying to isolate time spent searching for price from other uses of search time, by deriving our model used in estimation from a specific conceptual framework, and by extensive specification testing.

Keywords: information search; automobiles; economics of information; econometric models (search for similar items in EconPapers)
Date: 1993
References: Add references at CitEc
Citations: View citations in EconPapers (32)

Downloads: (external link)
http://dx.doi.org/10.1287/mksc.12.1.73 (application/pdf)

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:inm:ormksc:v:12:y:1993:i:1:p:73-87

Access Statistics for this article

More articles in Marketing Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().