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Title:Consumer search and oligopolistic pricing : an empirical investigation PDF Logo
Authors:Janssen, Maarten C. W.
Moraga-González, José Luis
Wildenbeest, Matthijs R.
Issue Date:2004
Series/Report no.:CESifo working papers 1292
Abstract: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!).
Subjects:consumer search
oligopoly
price dispersion
maximum likelihood estimation
JEL:D83
D40
L13
C13
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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