Multiproduct Search and the Joint Search Effect

This paper presents a sequential search model where consumers look for sev-eral products from multiproduct rms. In a multiproduct search market, bothconsumer behavior and rm behavior are di¤erent from the single-product case.For example, a consumer may return to previously visited rms before runningout of options, and prices can decrease with search costs. The framework is ex-tended by allowing rms to use bundling strategies. Bundling tends to reducethe intensity of consumer search, which can soften competition and reverse theusual welfare assessment of competitive bundling in a perfect information setting.Applications to countercyclical pricing, loss leader pricing, and endogenous retailmarket structure are also discussed.