Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/191904
Authors: 
Saur, Marc P.
Schlatterer, Markus G.
Schmitt, Stefanie Yvonne
Year of Publication: 
2019
Series/Report no.: 
BERG Working Paper Series 143
Abstract: 
We analyze the effects of consumers' limited attention on welfare in a model of horizontal product differentiation. We present a novel approach of modeling limited attention: an attention radius. Each consumer only notices goods that are within her attention radius, i.e., goods that are sufficiently similar to her preferred version of the good. Limited attention induces firms to differentiate their products in a way that is beneficial to consumers. In addition, prices may be lower under limited than under full attention. Consumer surplus and welfare are not maximized under full attention but increase for some degree of limited attention.
Subjects: 
Attention
Horizontal Product Differentiation
Hotelling
Price Discrimination
JEL: 
D43
D91
L13
ISBN: 
978-3-943153-64-4
Document Type: 
Working Paper

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