Competing for Consumer Inattention

Consumers purchase multiple types of goods and services, but may�be able to examine only a limited number of markets for the best price.�We propose a simple model which captures these features, conveying�some new insights. A firm's price can deflect or draw attention to its�market, and consequently, limited attention introduces a new dimension�of competition across markets. We fully characterize the resulting equilibrium, and show that the presence of partially attentive consumers�improves consumer welfare as a whole. When consumers are less attentive, they are more likely to miss the best offer in each market; but�the enhanced cross-market competition decreases average price paid, as�leading firms try to stay under the consumers' radar.