Competition in search markets with naive consumers.
We study a search market where firms may design products of inferior quality to promote them to naive consumers who misjudge product characteristics. We derive an equilibrium in which superior and inferior quality co‐exist and show that as search frictions vanish, the share of superior goods goes to...
| Publicado en: | RAND Journal of Economics (Wiley-Blackwell) Vol. 53; no. 2; pp. 356 - 386 |
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| Autores principales: | , |
| Formato: | Artículo |
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Wiley-Blackwell
Jun2022
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| Acceso en línea: | Ver este registro en EBSCOhost |
| fields | @attributes: recordID: 1 pdfLink: plink: https://search.ebscohost.com/login.aspx?direct=true&db=ssf&AN=157232995&site=ehost-live header: @attributes: shortDbName: ssf uiTerm: 157232995 longDbName: Social Sciences Full Text (H.W. Wilson) uiTag: AN controlInfo: bkinfo: jinfo: jid: 07416261 56RJ jtl: RAND Journal of Economics (Wiley-Blackwell) issn: 07416261 maglogo: Y pubinfo: dt: Jun2022 vid: 53 iid: 2 pid: 480 pub: Wiley-Blackwell artinfo: ui: 157232995 10.1111/1756-2171.12410 ppf: 356 ppct: 30 formats: fmt: – @attributes: type: T – @attributes: type: C – @attributes: type: P size: 458KB tig: atl: Competition in search markets with naive consumers. aug: au: Gamp, Tobias Krähmer, Daniel affil: Humboldt University Berlin University of Bonn su: Product quality Product attributes Product design Quality standards Design services Standardization sug: subj: Industrial Design Services Product quality Product attributes Product design Quality standards Design services Standardization ab: We study a search market where firms may design products of inferior quality to promote them to naive consumers who misjudge product characteristics. We derive an equilibrium in which superior and inferior quality co‐exist and show that as search frictions vanish, the share of superior goods goes to zero. The presence of inferior products harms sophisticated consumers, as it forces them to search longer for superior quality. Policy interventions that reduce search frictions such as the standardization of product information may harm welfare. In contrast, educating naive consumers as well as a minimum quality standard can improve welfare. pubtype: Academic Journal doctype: Article src: R language: English refInfo: copyright: @attributes: flag: N holdings: @attributes: islocal: N |
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