Journal Publication
Search, Information, and Prices
Search, Information, and Prices
Dirk Bergemann, Benjamin Brooks, and Stephen Morris
Journal of Political Economy 2021 129:8, 2275-2319
This paper studies the role of consumer search in determining prices of a homogeneous product sold by competing firms; in particular, it provides an upper bound on distribution of prices as a function of the number of price quotes that consumers obtain. A consequence of the paper’s results is that firms’ belief that consumers may only obtain one price quote can lead to high prices.