Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/203571
Authors: 
Schlatterer, Markus
Saur, Marc
Schmitt, Stefanie
Year of Publication: 
2019
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2019: 30 Jahre Mauerfall - Demokratie und Marktwirtschaft - Session: Industrial Organisation - Theory No. B13-V2
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
Document Type: 
Conference Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.