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Do Lower Search Costs Reduce Prices and Price Dispersion?

Pedro Pereira

No 4, Working Papers from Portuguese Competition Authority

Abstract: This paper presents a search model, for which a decrease in the search cost may lead to lower prices and to a lower price variance, but may also lead to the opposite. This result contrasts with some predictions about the impact of the Internet on prices, but fits well with the empirical literature on e-commerce.

Keywords: Search; Price Levels; Price Dispersion (search for similar items in EconPapers)
JEL-codes: D43 D83 L13 (search for similar items in EconPapers)
Date: 2004-09
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http://www.concorrencia.pt/download/WP04_LoSeCo.pdf First version, 2004 (application/pdf)
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Journal Article: Do lower search costs reduce prices and price dispersion? (2005) Downloads
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