Consumers' Evaluation Costs Shape Firms' Product Offerings, Prices
Firms with multiple products and consumers with evaluation costs decide how many products and firms to consider. The composition of the consideration set affects how firms compete in prices and product offerings. Contrary to previous studies, firm differences can reduce product lines, and within-firm evaluation costs can impact prices positively or negatively. Within-firm and across-firm evaluation costs are different, and firms may offer more products than needed if within-firm evaluation costs are high.