A Note on Costly Sequential Search and Oligopoly Pricing

Maarten C.W. Janssen (), Jose Moraga-Gonzalez and Matthijs Wildenbeest
Additional contact information
Maarten C.W. Janssen: Faculty of Economics, Erasmus Universiteit Rotterdam

No 04-068/1, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: We modify the paper of Stahl (1989) [Stahl, D.O., 1989. Oligopolistic pricing with sequential consumer search. American Economic Review 79, 700–12] by relaxing the assumption that consumers obtain the first price quotation for free. When all price quotations are costly to obtain, the unique symmetric equilibrium need not involve full consumer participation. The region of parameters for which non-shoppers do not fully participate in the market becomes larger as the number of shoppers decreases and/or the number of firms increases. The comparative statics properties of this new type of equilibrium are interesting. In particular, expected price increases as search cost decreases and is constant in the number of shoppers and in the number of firms. Welfare falls as firms enter the market. We show that monopoly pricing never obtains with truly costly search.

This discussion paper has resulted in a publication in the International Journal of Industrial Organization . (2005, 23(5-6), 451-66.)

Keywords: sequential consumer search; oligopoly; price dispersion (search for similar items in EconPapers)
JEL-codes: C13 D40 D83 L13 (search for similar items in EconPapers)
Date: 2004-06-15
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://papers.tinbergen.nl/04068.pdf (application/pdf)

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:tin:wpaper:20040068

Access Statistics for this paper

More papers in Tinbergen Institute Discussion Papers from Tinbergen Institute Contact information at EDIRC.
Bibliographic data for series maintained by Tinbergen Office +31 (0)10-4088900 ().