Search and Ripoff Externalities

Mark Armstrong

Review of Industrial Organization, 2015, vol. 47, issue 3, 273-302

Abstract: This paper surveys models of markets in which only some consumers are “savvy”. I discuss when the presence of savvy consumers improves the deals available to all consumers (the case of search externalities), and when the non-savvy consumers fund generous deals for all consumers (ripoff externalities). I also discuss when the two groups of consumers have aligned or divergent views about market interventions. The analysis focusses on two kinds of models: (1) an indivisible product in a market with price dispersion; and (2) products that involve add-on pricing. Copyright Springer Science+Business Media New York 2015

Keywords: Add-on pricing; Bounded rationality; Consumer protection; Consumer search; Externalities; Price dispersion (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (53)

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Related works:
Working Paper: Search and ripoff externalities (2015)
Working Paper: Search and Ripoff Externalities (2014)
Working Paper: Search and Ripoff Externalities (2014)
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DOI: 10.1007/s11151-015-9480-1

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