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A Search Model Where Consumers Choose Quantity Based on Expected Price
Author(s) -
Buccirossi Paolo
Publication year - 2003
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/j.0022-1821.2003.00208.x
Subject(s) - monopoly , microeconomics , economics , search cost , zero (linguistics) , process (computing) , face (sociological concept) , computer science , social science , linguistics , philosophy , sociology , operating system
I describe a price game in which consumers face search costs and base their quantity decision on the expected price. Because of search costs, the choice of the firm they will buy from is described by a random process. I show that the expected equilibrium price is above the monopoly price. This result does not change if demand comes from a small share of perfectly informed consumers with zero search costs.