EconPapers    
Economics at your fingertips  
 

Consumer search markets with costly revisits

Maarten Janssen and Alexei Parakhonyak

Economic Theory, 2014, vol. 55, issue 2, 514 pages

Abstract: This paper characterizes equilibrium outcomes in consumer search markets taking the cost of going back to stores already searched explicitly into account. We show that the optimal sequential search rule under costly revisits is very different from the traditional reservation price rule in that it is non-stationary and not independent of previously sampled prices. We explore the implications of costly revisits on market equilibrium in two celebrated search models. In the Wolinsky model, some consumers search beyond the first firm. In this class of models, costly revisits do make a substantive difference and their impact can be of the same order of magnitude as the initial search cost. In the Stahl oligopoly search model where consumers do not search beyond the first firm, there remains a unique symmetric equilibrium that has firms use pricing strategies that are identical to the perfect recall case. Copyright Springer-Verlag Berlin Heidelberg 2014

Keywords: Search; Costly revisits; Oligopoly; Competition; D11; D40; D83; L13 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23) Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.1007/s00199-013-0761-3 (text/html)
Access to full text is restricted to subscribers.

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:spr:joecth:v:55:y:2014:i:2:p:481-514

Ordering information: This journal article can be ordered from
http://www.springer. ... eory/journal/199/PS2

DOI: 10.1007/s00199-013-0761-3

Access Statistics for this article

Economic Theory is currently edited by Nichoals Yanneils

More articles in Economic Theory from Springer, Society for the Advancement of Economic Theory (SAET) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

 
Page updated 2020-10-23
Handle: RePEc:spr:joecth:v:55:y:2014:i:2:p:481-514