Prominence and Consumer Search: The Case With Multiple Prominent Firms

Jidong Zhou ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper extends Armstrong, Vickers, and Zhou (2007) to the case with multiple prominent firms. All consumers first search among prominent firms, and if their products are not satisfactory, they continue to search among non-prominent ones. Prominent firms will charge a lower price than their non-prominent rivals as in the case with a single prominent firm, but relative to the situation without any prominent firm, the presence of more than one prominent firm can induce all firms to raise their prices. We also characterize how market prices and welfare vary with the number of prominent firms.

Keywords: consumer search; marketing; prominence; product differentiation (search for similar items in EconPapers)
JEL-codes: D43 D83 L13 (search for similar items in EconPapers)
Date: 2009-01-06
New Economics Papers: this item is included in nep-com, nep-mic and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (128)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:12554

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