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Full-Text Articles in Social and Behavioral Sciences
Multiproduct Intermediaries, Andrew Rhodes, Makoto Watanabe, Jidong Zhou
Multiproduct Intermediaries, Andrew Rhodes, Makoto Watanabe, Jidong Zhou
Cowles Foundation Discussion Papers
This paper develops a new framework for studying multiproduct intermediaries when consumers demand multiple products and face search frictions. We show that a multiproduct intermediary is profitable even when it does not improve consumer search efficiency. In its optimal product selection, it stocks high-value products exclusively to attract consumers to visit, then profits by selling non-exclusive products which are relatively cheap to buy from upstream suppliers. However, relative to the social optimum, the intermediary tends to be too big and stock too many products exclusively. As applications we use the framework to study the optimal design of a shopping mall, …
Search, Information, And Prices, Dirk Bergemann, Benjamin Brooks, Stephen Morris
Search, Information, And Prices, Dirk Bergemann, Benjamin Brooks, Stephen Morris
Cowles Foundation Discussion Papers
Consider a market with identical firms offering a homogeneous good. A consumer obtains price quotes from a subset of firms and buys from the firm offering the lowest price. The “price count” is the number of firms from which the consumer obtains a quote. For any given ex ante distribution of the price count, we derive a tight upper bound (under first-order stochastic dominance) on the equilibrium distribution of sales prices. The bound holds across all models of firms’ common-prior higher-order beliefs about the price count, including the extreme cases of full information (firms know the price count) and no …
Search, Information, And Prices, Dirk Bergemann, Benjamin Brooks, Stephen Morris
Search, Information, And Prices, Dirk Bergemann, Benjamin Brooks, Stephen Morris
Cowles Foundation Discussion Papers
Consider a market with many identical firms offering a homogeneous good. A consumer obtains price quotes from a subset of firms and buys from the firm offering the lowest price. The “price count” is the number of firms from which the consumer obtains a quote. For any given ex ante distribution of the price count, we obtain a tight upper bound (under first-order stochastic dominance) on the equilibrium distribution of sale prices. The bound holds across all models of firms’ common-prior higher-order beliefs about the price count, including the extreme cases of complete information ( firms know the price count …
Search, Information, And Prices, Dirk Bergemann, Benjamin Brooks, Stephen Morris
Search, Information, And Prices, Dirk Bergemann, Benjamin Brooks, Stephen Morris
Cowles Foundation Discussion Papers
Consider a market with identical firms offering a homogeneous good. A consumer obtains price quotes from a subset of firms and buys from the firm offering the lowest price. The “price count” is the number of firms from which the consumer obtains a quote. For any given ex ante distribution of the price count, we obtain a tight upper bound (under first-order stochastic dominance) on the equilibrium distribution of sale prices. The bound holds across all models of firms’ common-prior higher-order beliefs about the price count, including the extreme cases of full information ( firms know the price count) and …