Uncertain product availability in search markets

Atabek Atayev

No 21-089, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: In many markets buyers are poorly informed about which firms sell the product (product availability) and prices, and therefore have to spend time to obtain this information. In contrast, sellers typically have a better idea about which rivals offer the product. Information asymmetry between buyers and sellers on product availability, rather than just prices, has not been scrutinized in the literature on consumer search. We propose a theoretical model that incorporates this kind of information asymmetry into a simultaneous search model. Our key finding is that greater product availability may harm buyers by mitigating their willingness to search and, thus, softening competition.

Keywords: Consumer Search; Uncertain Product Availability; Information Asymmetry (search for similar items in EconPapers)
JEL-codes: D43 D82 D83 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-com, nep-mic and nep-ore
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:21089

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