Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2004-06-29
Number: 04-071/1
Author-Name: Maarten C.W. Janssen
Author-Email: janssen@few.eur.nl
Author-Workplace-Name: Erasmus University Rotterdam
Author-Name: Jose Luis Moraga-Gonzalez
Author-Email: j.l.moraga.gonzalez@rug.nl
Author-Workplace-Name: University of Groningen
Author-Name: Matthijs R. Wildenbeest
Author-Email: wildenbeest@few.eur.nl
Author-Workplace-Name: Erasmus University Rotterdam
Title: Consumer Search and Oligopolistic Pricing: An Empirical Investigation
Abstract: This paper presents an empirical examination of oligopoly pricingand consumer search. The theoretical model allows for sequential andnon-sequential search and using the theoretical restrictions firm andconsumer behavior impose on the data we study the empirical validity of themodels. Two equilibria arise: one with costless search and the other withcostly search. We find that the costless search equilibrium works well forproducts with a relatively low value, and, by implication, a small number ofsellers. By contrast, the costly search equilibrium explains the observeddata in a manner that is consistent with the underlying theoretical modelfor almost all products (for 86 out of 87!).
Classification-JEL: C13; D40; L13
Keywords: consumer search; oligopoly; price dispersion; maximum likelihood estimation
File-Url: https://papers.tinbergen.nl/04071.pdf
File-Format: application/pdf
File-Size: 694307 bytes
Handle: RePEc:tin:wpaper:20040071