When Do Consumers Search?

27 Pages Posted: 29 Sep 2011

See all articles by Matthew S. Lewis

Matthew S. Lewis

Clemson University - John E. Walker Department of Economics

Howard P. Marvel

affiliation not provided to SSRN

Date Written: September 2011

Abstract

This paper provides empirical evidence relating search to price movements. We measure consumer search directly from traffic statistics for web sites that report gasoline prices. We show empirically that consumers search more as prices rise than they do when prices fall. Asymmetric search patterns have consequences for price behavior. Our findings indicate that retail margins are squeezed by increased search. In addition, we show that there is more price dispersion when prices are falling than when prices are either stable or rising. Our results provide a search‐based explanation for the ‘rockets and feathers’ phenomenon of asymmetric price adjustment.

Suggested Citation

Lewis, Matthew S. and Marvel, Howard P., When Do Consumers Search? (September 2011). The Journal of Industrial Economics, Vol. 59, Issue 3, pp. 457-483, 2011, Available at SSRN: https://ssrn.com/abstract=1935211 or http://dx.doi.org/10.1111/j.1467-6451.2011.00459.x

Matthew S. Lewis (Contact Author)

Clemson University - John E. Walker Department of Economics ( email )

Clemson, SC 29634
United States

Howard P. Marvel

affiliation not provided to SSRN

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