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Consumer Search with Price Sorting

Author

Listed:
  • Yuxin Chen

    (NYU Shanghai)

  • Sanxi Li

    (School of Economics, Renmin University of China)

  • Jun Yu

    (School of Economics, Shanghai University of Finance and Economics
    Key Laboratory of Mathematical Economics (SUFE), Ministry of Education)

Abstract

This article considers costly sequential search in an online-shopping platform in which either ascending or descending price sorting can be applied prior to the search process. Our model generates price dispersion in the unique symmetric equilibrium for each type of price sorting. Moreover, we show that consumers choose ascending/descending price sorting when the proportion of high-quality firms is high/low. Finally, when search costs are small, the availability of price sorting improves consumer surplus but has no impact on industry profit.

Suggested Citation

  • Yuxin Chen & Sanxi Li & Jun Yu, 2024. "Consumer Search with Price Sorting," Annals of Economics and Finance, Society for AEF, vol. 25(2), pages 363-421, November.
    • Handle: RePEc:cuf:journl:y:2024:v:25:i:2:chenliyu
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    More about this item

    Keywords

    Consumer search; Product differentiation; Sorting; Search accuracy; Price dispersion;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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