Partially Directed Search for Prices

Eeva Mauring

No 16268, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: I analyse a model of partially directed search where searchers decide which firm to visit based on correct, but incomplete, information about firms' prices. Firms' pure strategies are allowed to be price distributions and in the unique symmetric pure-strategy equilibrium the price distributions are nondegenerate. The model's results rationalise empirical observations on promotions and changes in consumer prices: the lowest offered prices are unprofitable, the pdf of the price distribution is increasing, and the lowest prices are decreasing in the number of firms and the search cost.

Keywords: Price dispersion; Partial information; Partially directed search; Sales; Unprofitable promotions (search for similar items in EconPapers)
JEL-codes: D43 D83 L13 (search for similar items in EconPapers)
Date: 2021-06
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP16268 (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:16268

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP16268

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 ().