Search and ripoff externalities

Working paper

This paper surveys models of markets in which some consumers are "savvy" while others are not. We discuss when the presence of savvy consumers improves the deals available to non-savvy consumers in the market (the case of search externalities), and when the non-savvy fund generous deals for savvy consumers (ripoff externalities). We also discuss when the two groups of consumers have aligned or divergent views about market interventions. The analysis covers two overlapping families of model...

Expand abstract

Authors: Armstrong, M

• Publication status: Published
• Publisher: University of Oxford Publisher's website
• Series: Department of Economics Discussion Paper Series
• Publication date: 2014-07-29
• Paper number: 715
• Keywords: add-on pricing; hold-up; price dispersion; consumer search; consumer protection