The Impact of Selling Information on Competition

Karl Schlag

No 1407, Econometric Society World Congress 2000 Contributed Papers from Econometric Society

Abstract: We consider a homogenous good oligoply with identical consumers who learn about prices either by (sequentially) visiting firms or by consulting a price agency who sells information about which firm charges the lowest price. In the sequential equilibrium with maximal trade and minimal search, prices are dispersed and consumers randomize between consulting a price agency and buying at the first firm encountered. Low competition among price agencies induces maximal price dispersion. High competition among firms leads to offers that are either ripoffs or bargains, most consumers visit a price agency and firms' profits are small.

Date: 2000-08-01
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Working Paper: The Impact of Selling Information on Competition (2000)
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