Competitive price discrimination, imperfect information, and consumer search
| Autor: | Carl-Christian Groh |
|---|---|
| Rok vydání: | 2021 |
| Předmět: |
TheoryofComputation_MISCELLANEOUS
History Polymers and Plastics Perfect information TheoryofComputation_GENERAL Binary number Price discrimination Intermediate level Industrial and Manufacturing Engineering Microeconomics Path (graph theory) Economics Search cost Imperfect Business and International Management Linear search |
| Zdroj: | SSRN Electronic Journal. |
| ISSN: | 1556-5068 |
| DOI: | 10.2139/ssrn.3799167 |
| Popis: | Price discrimination in real-world settings is likely based on imperfect information. I analyse a homogenous goods framework where firms receive binary and noisy signals about consumer valuations and consumers engage in sequential search. Firms have no information about consumers' search histories. In this framework, the existence of on-path search can be understood as an imperfect screening device that firms employ to the detriment of consumers. Firm profits and equilibrium prices are highest in the unique symmetric pure-strategy equilibrium with search on the equilibrium path, as compared to any other symmetric pure-strategy equilibrium. The equilibrium with on-path search can only be sustained when search costs are at an intermediate level. At low search costs, an equilibrium is played in which there is no on-path search, but consumers use the threat of searching to ensure low prices. High levels of signal precision are detrimental to consumers by facilitating existence of the equilibrium with on-path search. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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