Consumers Networks and Search Equilibria
- Creators
- Galeotti, Andrea
Abstract
We explore the effect of local information sharing among consumers on market functioning. Consumers are embedded in a consumers network, they may costly search non-sequentially for price quotations and the information gathered are non-excludable along direct links. We first show that when search costs are low consumers randomize between searching for one price and two price quotations (high search intensity equilibrium). Otherwise, consumers randomize between searching for one price and not searching at all (low search intensity equilibrium). In both equilibria consumers search less frequently in denser networks. The main result of the paper shows that when search costs are low the expected price and the social welfare increase, while the consumer surplus decreases, as the consumers network becomes denser. These results are reverse when search costs are high.
Additional Information
I am grateful to V. Bhaskar, K. Burdett, G. Conti, S. Goyal, M. Janssen, S. Mutuswami and J.L. Moraga-Gonzalez for useful comments on earlier versions of the paper. I also thank seminar participants at University of Essex, Caltech and ESRC Research Seminars in Game Theory-UCL.Attached Files
Submitted - sswp1225.pdf
Files
Name | Size | Download all |
---|---|---|
md5:266212f89a7502511df2dcf718467429
|
408.0 kB | Preview Download |
Additional details
- Eprint ID
- 79974
- Resolver ID
- CaltechAUTHORS:20170808-154749005
- Created
-
2017-08-09Created from EPrint's datestamp field
- Updated
-
2019-10-03Created from EPrint's last_modified field
- Caltech groups
- Social Science Working Papers
- Series Name
- Social Science Working Paper
- Series Volume or Issue Number
- 1225