Comparison Shopping: Learning Before Buying From Duopolists
Theoretical Economics
2023-04-18 v2
Abstract
We explore a model of duopolistic competition in which consumers learn about the fit of each competitor's product. In equilibrium, consumers comparison shop: they learn only about the relative values of the products. When information is cheap, increasing the cost of information decreases consumer welfare; but when information is expensive, this relationship flips. As information frictions vanish, there is a limiting equilibrium that is ex post efficient.
Cite
@article{arxiv.2302.06580,
title = {Comparison Shopping: Learning Before Buying From Duopolists},
author = {Brian C. Albrecht and Mark Whitmeyer},
journal= {arXiv preprint arXiv:2302.06580},
year = {2023}
}