Consumer Search and Oligopolistic Pricing: An Empirical Investigation

Maarten C. W. Janssen, Jose Moraga-Gonzalez and Matthijs Wildenbeest

No 1292, CESifo Working Paper Series from CESifo

Abstract: This paper presents an empirical examination of oligopoly pricing and consumer search. The theoretical model allows for sequential and non-sequential search and, using the theoretical restrictions firm and consumer behavior impose on the data, we study the empirical validity of the models. Two equilibria arise: one with costless search and the other with costly search. We find that the costless search equilibrium works well for products with a relatively low value, and, by implication, a small number of sellers. By contrast, the costly search equilibrium explains the observed data in a manner that is consistent with the underlying theoretical model for almost all products (for 86 out of 87!).

Keywords: consumer search; oligopoly; price dispersion; maximum likelihood estimation (search for similar items in EconPapers)
Date: 2004
New Economics Papers: this item is included in nep-com and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Consumer Search and Oligopolistic Pricing: An Empirical Investigation (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_1292

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