E-Commerce

Ordered Search In Differentiated Markets

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Executive Summary

This paper presents an ordered search model in which consumers search both for price and product fitness. The authors show that there is price dispersion in equilibrium and prices rise in the order of search. The top firms in consumer search order, though charge lower prices, earn higher profits due to their larger market shares. In a variety of circumstances, consumers need to search to find a satisfactory product. However, not as most of the search literature assumes, the order in which consumers search through alternatives is often not random.

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