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Returns to Consumer Search: Evidence from Ebay

27 Pages Posted: 7 Jun 2016  

Tom Blake

eBay Research Labs

Chris Nosko

University of Chicago - Booth School of Business

Steven Tadelis

University of California, Berkeley - Haas School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Date Written: June 2016

Abstract

A growing body of empirical literature finds that consumers are relatively limited in how much they search over product characteristics. We assemble a dataset of search and purchase behavior from eBay to quantify the returns, and thus implied costs, to consumer search on the internet. The extensive nature of the eBay data allows us to examine a rich and detailed set of questions related to search in a way that previous structural models cannot. In contrast to the literature, we find that consumers search a lot: on average 36 times per purchase over 3 (distinct) days, with most sessions ending in no purchase. We find that search costs are relatively low, in the region of 25 cents per search page. We pursue the analysis further by, i) examining how users refine their search, ii) how search behavior spans multiple search sessions, and iii) how the amount of search relates to finding lower prices.

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Suggested Citation

Blake, Tom and Nosko, Chris and Tadelis, Steven, Returns to Consumer Search: Evidence from Ebay (June 2016). NBER Working Paper No. w22302. Available at SSRN: https://ssrn.com/abstract=2790699

Tom Blake (Contact Author)

eBay Research Labs ( email )

2065 Hamilton Avenue
San Jose, CA
United States

Chris Nosko

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Steven Tadelis

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR) ( email )

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

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