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Comparison Shopping: Learning Before Buying From Duopolists

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  • Brian C. Albrecht
  • Mark Whitmeyer

Abstract

We explore a model of duopolistic competition in which consumers learn about the fit of each competitor's product. In equilibrium, consumers comparison shop: they learn only about the relative values of the products. When information is cheap, increasing the cost of information decreases consumer welfare; but when information is expensive, this relationship flips. As information frictions vanish, there is a limiting equilibrium that is ex post efficient.

Suggested Citation

  • Brian C. Albrecht & Mark Whitmeyer, 2023. "Comparison Shopping: Learning Before Buying From Duopolists," Papers 2302.06580, arXiv.org, revised Apr 2023.
    • Handle: RePEc:arx:papers:2302.06580
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    References listed on IDEAS

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