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Non-reservation price equilibria and consumer search

Abstract:

Reservation price equilibria (RPE) do not accurately assess market power in consumer search markets. In most search markets, consumers do not know important elements of the environment in which they search (such as, for example, firms' cost). We argue that when consumers learn when searching, RPE suffer from theoretical issues, such as non-existence and critical dependence on specific out-of-equilibrium beliefs. We characterize equilibria where consumers rationally choose search strategies th...

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Publication status:
Published
Peer review status:
Peer reviewed
Version:
Publisher's version

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Publisher copy:
10.1016/j.jet.2017.08.003

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Institution:
University of Oxford
Department:
Lincoln College
Role:
Author
Publisher:
Elsevier Publisher's website
Journal:
Journal of Economic Theory Journal website
Volume:
172
Pages:
120-162
Publication date:
2017-08-18
Acceptance date:
2017-08-07
DOI:
ISSN:
1095-7235
Pubs id:
pubs:724712
URN:
uri:27c825f1-3ed3-4bd2-acff-b8bb8175524e
UUID:
uuid:27c825f1-3ed3-4bd2-acff-b8bb8175524e
Local pid:
pubs:724712

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