EconPapers    
Economics at your fingertips  
 

A Model of Search with Price Discrimination

Natalia Fabra ()

No 12823, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We introduce heterogeneity in buyers' size into a model of simultaneous search. Buyers' differences in their willigness to search give rise to price discrimination, even if their valuations for the good are equal. We shed light on three related questions: (i) what is the relationship between prices and buyers' size? (ii) what are the effects of reducing search costs?, and (iii) who benefits and who is hurt by price discrimination? The answers critically depend on the elasticity of the search cost distribution. Interestingly, for normally distributed search costs, (i) there is an inverted U-shape relationship between prices and buyers' size, (ii) when search costs go down, the prices charged to small buyers do not fall as much as those charged to the large ones (and can even go up), and (iii) price discrimination benefits small and large buyers, at the expense of the medium-size buyers.

Keywords: bid solicitation; price discrimination; search (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com and nep-mic
Date: 2018-03
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=12823 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

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:cpr:ceprdp:12823

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... rs/dp.php?dpno=12823

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().

 
Page updated 2019-10-03
Handle: RePEc:cpr:ceprdp:12823