Consumer Search and Oligopolistic Pricing: An Empirical Investigation
June 2004
Research Paper
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This paper presents an empirical examination of oligopoly pricing and consumer search. The theoretical model allows for sequential and non-sequential search and using the theoretical restrictions firm and consumer behavior impose on the data we study the empirical validity of the models. Two equilibria arise: one with costless search and the other with costly search. We find that the costless search equilibrium works well for products with a relatively low value, and, by implication, a small number of sellers. By contrast, the costly search equilibrium explains the observed data in a manner that is consistent with the underlying theoretical model for almost all products (for 86 out of 87!).
Keywords
Classifications using
Journal of Economic Literature (JEL) Classification System
- L13 : Oligopoly and Other Imperfect Markets
- D40 : Market Structure and Pricing: General
- C13 : Estimation
Automatically Extracted Terms
- search
- price
- equilibrium
- consumer
- costless search equilibrium
- kingston
- model
- mouse
- 0.000
- search equilibrium
- costles
- keyboard
- distribution
- product
- price dispersion
- market
- estimate
- equation
- belkin
- 6.00
