Abstract
We estimate a model of incomplete information price competition where consumers endogenously
choose whether to use a price search website. We examine how consumer search and prices
would change under different transparency regimes. We find that aggregate consumer welfare
is maximized when the price search website lists the lowest 20% of prices (i.e., one station in
markets with less than five stations, and two stations in markets with more than five stations),
with consumer expenditures falling by 1.5% relative to a regime where all are listed.
choose whether to use a price search website. We examine how consumer search and prices
would change under different transparency regimes. We find that aggregate consumer welfare
is maximized when the price search website lists the lowest 20% of prices (i.e., one station in
markets with less than five stations, and two stations in markets with more than five stations),
with consumer expenditures falling by 1.5% relative to a regime where all are listed.
| Translated title of the contribution | Market transparency and consumer search—Evidence from the German retail gasoline market |
|---|---|
| Original language | English |
| Pages (from-to) | 573-602 |
| Number of pages | 30 |
| Journal | RAND Journal of Economics |
| Volume | 55 |
| Issue number | 4 |
| Early online date | 6 Nov 2024 |
| DOIs | |
| Publication status | Published - Dec 2024 |
Austrian Fields of Science 2012
- 502013 Industrial economics
Keywords
- consideration sets
- consumer search
- market transparency
- retail gasoline prices
- awareness