Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/85461
Authors: 
Janssen, Maarten C.W.
Moraga, Jose Luis
Year of Publication: 
2000
Series/Report no.: 
Tinbergen Institute Discussion Paper 00-042/1
Abstract: 
Despite the mixed empirical evidence, many economists stillhold to the view that Internet will promote competition betweenfirms,thereby lowering prices and increasing economic welfare. This paperpresents a search model that provides a different view. We analyzethemarket for a homogeneous good where some consumers are fully informedwhile others are not. Depending on the parameter values, there may bethree types of equilibria and the comparative statics results aredifferent for each of these equilibria. For example, a reduction insearch cost may raise equilibrium prices when consumers' searchintensity is low, but reduce prices when consumers search intensityis high. These different comparative statics results may explain themixed empirical evidence found so far.
Subjects: 
Internet
price dispersion
search
search agents
JEL: 
D40
D83
L13
Document Type: 
Working Paper

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