2022/06/09 by Atabek Atayev, Atayev, Atabek
Business, Management and Accounting · Decision Sciences · #Auction Theory and Applications #Consumer Market Behavior and Pricing #FOS: Economics and business #Game Theory and Applications #Theoretical Economics (econ.TH)
paper · pdf · doi:10.48550/arxiv.2206.04576
openalex publication_date 2022/06/09 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
The existing studies on consumer search agree that consumers are worse-off when they do not observe sellers' production marginal cost than when they do. In this paper we challenge this conclusion. Employing a canonical model of simultaneous search, we show that it may be favorable for consumer to not observe the production marginal cost. The reason is that, in expectation, consumer search more intensely when they do not know sellers' production marginal cost than when they know it. More intense search imposes higher competitive pressure on sellers, which in turn benefits consumers through lower prices.