Business, Management and Accounting
4 years ago

Consumer search technology intensifies price competition but boosts firm monopoly power.

RePEc: Research Papers in Economics
Inflation, price competition and consumer search technology
Makoto Watanabe Watanabe

Paper Summary

Related papers

Theme background image
Social Sciences
4 years ago

Consumers overlook quality in price wars, leading to lower efficiency.

Economic Behavior
Mechanism Design
Network Formation
1 view
Business, Management and Accounting
4 years ago

German electricity prices soar as consumers search, incumbents exploit pricing power.

Economic Analysis
Market Dynamics
Mechanism Design
Business, Management and Accounting
4 years ago

Inflation boosts monopoly power and entry in tech-savvy search markets.

Economic Analysis
Mechanism Design
Two-Sided Markets

This paper looks at how inflation and competition between prices affect how consumers search for products. The study shows that when consumers can easily search for prices, companies compete more on prices. Surprisingly, in these markets, inflation can actually make companies more powerful and encourage new companies to enter the market. This model also gives new insights into how companies decide on their prices.