Asymmetric Sequential Search

22 Pages Posted: 9 Jun 2010 Last revised: 22 Jun 2016

See all articles by Carmen Astorne-Figari

Carmen Astorne-Figari

University of Memphis - Economics

Aleksandr Yankelevich

Federal Communications Commission

Date Written: September 16, 2013

Abstract

This note explores asymmetries in the way consumers sample prices in a simple variation of Stahl's (1989) seminal model of sequential search. In the note, we characterize a unique equilibrium in which a firm that caters to more local consumers selects prices from a distribution which first order stochastically dominates that of its rival and contains mass at the upper bound of firm price distributions. Both firms exhibit higher prices as the proportion of consumers local to one firm rises, though surprisingly, at the limit, the Diamond paradox may not manifest.

Keywords: Sequential Consumer Search, Oligopoly, Price Dispersion

JEL Classification: D43, D83, L13

Suggested Citation

Astorne-Figari, Carmen and Yankelevich, Aleksandr, Asymmetric Sequential Search (September 16, 2013). Economics Letters, Vol. 122, No. 2, 2014, Available at SSRN: https://ssrn.com/abstract=1622809 or http://dx.doi.org/10.2139/ssrn.1622809

Carmen Astorne-Figari

University of Memphis - Economics ( email )

Memphis, TN 38152
Memphis, TN usa 38152-3370
United States

HOME PAGE: http://www.carmenastorne.com

Aleksandr Yankelevich (Contact Author)

Federal Communications Commission ( email )

445 12th Street SW
Rm. TW-B204
Washington, DC 20554
United States

HOME PAGE: http://https://aleksyankelevich.com/

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