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Prominence and Consumer Search.

Abstract:

This article examines the implications of "prominence" in search markets. We model prominence by supposing that the prominent firm will be sampled first by all consumers. If there are no systematic quality differences among firms, we find that the prominent firm will charge a lower price than its less prominent rivals. Making a firm prominent will typically lead to higher industry profit but lower consumer surplus and welfare. The model is extended by introducing heterogeneous product qualiti...

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Authors


Mark Armstrong More by this author
John Vickers More by this author
Jidong Zhou More by this author
Journal:
RAND Journal of Economics
Volume:
40
Issue:
2
Publication date:
2009
DOI:
URN:
uuid:29889df4-ecdc-4670-8a81-ab82233e4b00
Local pid:
oai:economics.ouls.ox.ac.uk:14630
Language:
English

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