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Search, Showrooming, and Retailer Variety

Heski Bar-Isaac () and Sandro Shelegia

No 15448, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: In a model of consumer search, we trace through effects of changes in retail variety. Some consumers visit stores that offer many products that are imperfect substitutes, learn which product they like most, and then buy it elsewhere. These showroomers put upward pressure on prices elsewhere because they populate the market with consumers who know their preferences, in the style of the Diamond paradox (Diamond (1971)). Changes in retail variety affect search behaviour and all market outcomes. One change that we examine is the introduction of a shopping venue where prices are readily available but product information is not.

Keywords: consumer search; Pricing; Retailer Variety; Showrooming (search for similar items in EconPapers)
JEL-codes: D83 L11 L14 (search for similar items in EconPapers)
Date: 2020-11
New Economics Papers: this item is included in nep-com and nep-mic
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