Article ID: | iaor20042242 |
Country: | United Kingdom |
Volume: | 51 |
Issue: | 4 |
Start Page Number: | 427 |
End Page Number: | 432 |
Publication Date: | Dec 2003 |
Journal: | Journal of Industrial Economics |
Authors: | Buccirossi Paolo |
Keywords: | search |
I describe a price game in which consumers face search costs and base their quantity decision on the expected price. Because of search costs, the choice of the firm they will buy from is described by a random process. I show that the expected equilibrium price is above the monopoly price. This result does not change if demand comes from a small share of perfectly informed consumers with zero search costs.