Bergemann, Dirk
[VerfasserIn]
;
Brooks, Benjamin
[Sonstige Person, Familie und Körperschaft];
Morris, Stephen
[Sonstige Person, Familie und Körperschaft]
Erschienen in:Cowles Foundation Discussion Paper ; No. 2224R
Umfang:
1 Online-Ressource (60 p)
Sprache:
Englisch
DOI:
10.2139/ssrn.3599645
Identifikator:
Entstehung:
Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments May 12, 2020 erstellt
Beschreibung:
Consider a market with identical firms offering a homogeneous good. A consumer obtains price quotes from a subset of firms and buys from the firm offering the lowest price. The “price count” is the number of firms from which the consumer obtains a quote. For any given ex ante distribution of the price count, we obtain a tight upper bound (under first-order stochastic dominance) on the equilibrium distribution of sale prices. The bound holds across all models of firms' common-prior higher-order beliefs about the price count, including the extreme cases of full information ( firms know the price count) and no information (firms only know the ex-ante distribution of the price count). A qualitative implication of our results is that a small ex ante probability that the price count is one can lead to a large increase in the expected price. The bound also applies in a wide class of models where the price count distribution is endogenized, including models of simultaneous and sequential consumer search