2020/06/11 by José L. Moraga‐González, Zsolt Sándor, Matthijs R. Wildenbeest · 1 citation
Business, Management and Accounting · Decision Sciences · Economics, Econometrics and Finance · #Consumer Market Behavior and Pricing #Auction Theory and Applications #Merger and Competition Analysis
paper · doi:10.1093/ej/ueaa075
openalex publication_date 2020/06/11 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/01
Abstract We extend the literature on simultaneous search by allowing for differentiated products and search cost heterogeneity. We show conditions under which a symmetric price equilibrium exists. We provide a necessary and sufficient condition under which an increase in search costs may result in a lower, equal or higher equilibrium price. We extend this analysis to the case with more than two firms. The effects of prominence on equilibrium prices are also studied. The prominent firm charges a higher price than the non-prominent firm and both their prices are below the symmetric equilibrium price. Consequently, market prominence increases the consumers’ surplus.