Do lower search costs reduce prices and price dispersion?

Pereira, Pedro

doi:10.1016/j.infoecopol.2004.03.001

Cited by 27 publications

(22 citation statements)

References 23 publications

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“…Therefore, in line with the literature on electronic versus regular marketplaces, it might be reasonable to expect the role of the consumers' search costs to be different for the services industries. These costs might be important as they can affect the intensity of competition (Campbell et al, 2005;Pereira, 2005). Although theory does not have a clear-cut inference on the direction of the effect, empirical studies point out that lowering consumers' search costs increases the intensity of competition (e.g., Brown and Goolsbee, 2002).…”

Section: Alternative Explanations: Are the Services Industries Differmentioning

confidence: 99%

The Impact of Telecommunication Technologies on Competition in Services and Goods Markets: Empirical Evidence

Jerbashian

Kochanova

2017

Scandinavian J Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractIn this paper we empirically show that a more intensive use and wider adoption of telecommunication technologies significantly increases the level of product market competition in services and goods markets. Our result is consistent with the view that the use of telecommunication technologies can lower the costs of entry. This finding is robust to various measures of competition and a range of specification checks.

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Section: Alternative Explanations: Are the Services Industries Differmentioning

confidence: 99%

The Impact of Telecommunication Technologies on Competition in Services and Goods Markets: Empirical Evidence

Jerbashian

Kochanova

2017

Scandinavian J Economics

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“…2. The search literature has no simple prediction about the relation between search costs, price levels, or price dispersion (Pereira, 2005;Samuelson and Zhang, 1992).…”

Section: Preliminary Thoughtsmentioning

confidence: 99%

Bias and Size Effects of Price-Comparison Platforms: Theory and Experimental Evidence

Garcı́a-Gallego

Georgantzı́s

Pereira³

et al. 2016

Review of Network Economics

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We analyze the impact on consumer prices of some information characteristics of price-comparison search platforms. An equilibrium model where vendors compete in prices and consumers do not observe prices, but can obtain price information through a search platform, is developed. The model generates several predictions about the impact on the price distribution of: (i) the size of the search platform’s sample, (ii) whether the search platform’s sample is random, and (iii) the number of vendors in the market. The model’s predictions are tested experimentally. The results confirm the predictions about (ii) and (iii), but reject the model’s predictions about (i).

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“…The overall agreement is that despite the significant reduction in search costs in MAS, due to recent advances in communication technologies, these cannot be completely ignored [5]. Substantial research has been devoted to investigate the effect of search costs reduction on price dispersion in search-based eCommerce models [46]. These works, however, focus on the sellers' pricing strategies, taking the buyers' search behaviors and market prices as an input, rather than on the efficiency of the system.…”

Section: Related Workmentioning

confidence: 99%

Exploration costs as a means for improving performance in multiagent systems

Sarne

Aumann

2014

Ann Math Artif Intell

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We consider settings were agents are faced with several possible opportunities and need to choose one. Each opportunity may offer a different utility to the agent, and determining this utility may consume resources. The underlying costly exploration problem is termed "economic search", though its essence is different from the traditional search notion in artificial intelligence (e.g. BFS, IDDFA, and A*), as there is no underlying combinatorial structure to the opportunities. We study the effects that search costs can have on individual and aggregate utility in distributed multi-agent economic-search settings. Traditionally, in such setting, search costs are regarded as a market inefficiency, and, as such, as something to be avoided or reduced to a minimum. We show, in contrast, that in many search settings, the introduction of search costs can actually improve the aggregate social welfare, or even the expected utility of each and every individual agent. We note that the proceeds from the search costs are assumed to be wasted, with no one directly benefiting from them. We demonstrate the benefits of search costs in both one-sided and two-sided search settings, using standard, classical models from economic-search theory. For the designers of multiagent systems, the results imply that deliberate (and potentially artificial) increase of search costs should be considered as possible means to improving the system's overall performance.

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Do lower search costs reduce prices and price dispersion?

Cited by 27 publications

References 23 publications

The Impact of Telecommunication Technologies on Competition in Services and Goods Markets: Empirical Evidence

The Impact of Telecommunication Technologies on Competition in Services and Goods Markets: Empirical Evidence

Bias and Size Effects of Price-Comparison Platforms: Theory and Experimental Evidence

Exploration costs as a means for improving performance in multiagent systems

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