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| Main Authors: | , |
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| Format: | Preprint |
| Published: |
2024
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| Subjects: | |
| Online Access: | https://arxiv.org/abs/2402.11754 |
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| _version_ | 1866917592962170880 |
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| author | Au, Pak Hung Whitmeyer, Mark |
| author_facet | Au, Pak Hung Whitmeyer, Mark |
| contents | We study the ramifications of increased commitment power for information provision in an oligopolistic market with search frictions. Although prices are posted and, therefore, guide search, if firms cannot commit to information provision policies, there is no active search at equilibrium so consumers visit (and purchase from) at most one firm. If firms can guide search by both their prices and information policies, there exists a unique symmetric equilibrium exhibiting price dispersion and active search. Nevertheless, when the market is thin, consumers prefer the former case, which features intense price competition. Firms always prefer the latter. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2402_11754 |
| institution | arXiv |
| publishDate | 2024 |
| record_format | arxiv |
| spellingShingle | Attraction Via Prices and Information Au, Pak Hung Whitmeyer, Mark Theoretical Economics We study the ramifications of increased commitment power for information provision in an oligopolistic market with search frictions. Although prices are posted and, therefore, guide search, if firms cannot commit to information provision policies, there is no active search at equilibrium so consumers visit (and purchase from) at most one firm. If firms can guide search by both their prices and information policies, there exists a unique symmetric equilibrium exhibiting price dispersion and active search. Nevertheless, when the market is thin, consumers prefer the former case, which features intense price competition. Firms always prefer the latter. |
| title | Attraction Via Prices and Information |
| topic | Theoretical Economics |
| url | https://arxiv.org/abs/2402.11754 |