Abstract:We analyze a model of duopolistic competition in a search market, where firms compete by choosing prices and the number of outlets, while consumers are ignorant about the individual locations. The deg...We analyze a model of duopolistic competition in a search market, where firms compete by choosing prices and the number of outlets, while consumers are ignorant about the individual locations. The degree of price transparency prevailing in the market is modeled by the fraction of consumers who can observe price changes by both firms. Firms compete in two stages by first determining the number of outlets and then engaging in simultaneous price competition. We analyze a particular case with a uniform distribution of buyers' search costs to show that in oligopolistic search markets price competition need not increase with higher price transparency. Instead, firms may reduce their outlet numbers sufficiently.Read More
Publication Year: 1998
Publication Date: 1998-01-01
Language: en
Type: article
Access and Citation
AI Researcher Chatbot
Get quick answers to your questions about the article from our AI researcher chatbot