Ordered Consumer Search

Mark Armstrong

No 804, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: The paper discusses situations in which consumers search through their options in a deliberate order, in contrast to more familiar models with random search. Topicsinclude: the existence of ordered search equilibria with symmetric sellers (all consumers first inspect the seller they anticipate sets the lowest price, and a seller whichis inspected first by consumers will set the lowest price); the use of price and non-price advertising to direct search; the impact of consumers starting a new search attheir previous supplier; and the incentive a seller can have to raise its own searchcost. I also show how ordered search can be reformulated as a simpler discrete choiceproblem without search frictions or dynamic decision making.

Keywords: Consumer search; sequential search; ordered search; directed search; discrete choice; oligopoly; advertising; obfuscation. (search for similar items in EconPapers)
JEL-codes: D21 D43 D83 L11 L15 M37 (search for similar items in EconPapers)
Date: 2016-09-14
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