Paper by fellow José L Moraga-González and alumnus Matthijs R Wildenbeest accepted for The Economic Journal
The paper ‘Simultaneous Search for Differentiated Products: The Impact of Search Costs and Firm Prominence' by research fellow José L Moraga-González (Vrije Universiteit Amsterdam), alumnus Matthijs R. Wildenbeest (Indiana University, United States), and Zsolt Sándor (Sapientia University, Romania) has been accepted for publication in The Economic Journal and is now online.
We extend the literature on simultaneous search by allowing for differentiated products and search cost heterogeneity. We show conditions under which a symmetric price equilibrium exists. We provide a necessary and sufficient condition under which an increase in search costs may result in a lower, equal or higher equilibrium price. We extend this analysis to the case with more than two firms. The effects of prominence on equilibrium prices are also studied. The prominent firm charges a higher price than the non-prominent firm and both their prices are below the symmetric equilibrium price. Consequently, market prominence increases the consumers’ surplus.
José L Moraga-González, Zsolt Sándor, Matthijs R Wildenbeest, “Simultaneous Search for Differentiated Products: The Impact of Search Costs and Firm Prominence”, The Economic Journal, forthcoming, https://doi.org/10.1093/ej/ueaa075.