Price Competition under Limited Comparability

Michele Piccione and Ran Spiegler ()

No 275750, Foerder Institute for Economic Research Working Papers from Tel-Aviv University > Foerder Institute for Economic Research

Abstract: This paper studies market competition when firms can influence consumers’ ability to compare market alternatives, through their choice of price “formats”. In our model, the ability of a consumer to make a comparison depends on the firms’ format choices. Our main results concern the interaction between firms’ equilibrium price and format decisions and its implications for industry profits and consumer switching rates. In particular, market forces drive down the firms’ profits to a “constrained competitive” benchmark if and only if the comparability structure satisfies a property which we interpret as a form of “frame neutrality”. The same property is necessary for equilibrium behavior to display statistical independence between price and format decisions. We also show that narrow regulatory interventions that aim to facilitate comparisons may have an anticompetitive effect.

Keywords: Demand and Price Analysis; Financial Economics (search for similar items in EconPapers)
Pages: 38
Date: 2011-06
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/275750/files/12-2011.pdf (application/pdf)

Related works:
Journal Article: Price Competition Under Limited Comparability (2012)
Working Paper: Price Competition under Limited Comparability (2010)
Working Paper: Price Competition under Limited Comparability (2009)
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:ags:isfiwp:275750

DOI: 10.22004/ag.econ.275750

Access Statistics for this paper

More papers in Foerder Institute for Economic Research Working Papers from Tel-Aviv University > Foerder Institute for Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().