A buyer can either buy a good at a local monopolist or search for it in the market. The more intensely the buyer searches, the more likely he will find the good in the market; if his search fails, he can still buy it from the local monopolist. We show that a buyer with a higher willingness to pay searches (weakly) more intensely. This skews the distribution of types buying at the local monopolist towards lower valuations and exerts pressure on the local monopolist to reduce his price. Despite this effect, offering the monopoly price remains weakly optimal in equilibrium.

Optimal pricing, private information and search for an outside offer

Auster, Sarah;Kos, Nenad;Piccolo, Salvatore
2021

Abstract

A buyer can either buy a good at a local monopolist or search for it in the market. The more intensely the buyer searches, the more likely he will find the good in the market; if his search fails, he can still buy it from the local monopolist. We show that a buyer with a higher willingness to pay searches (weakly) more intensely. This skews the distribution of types buying at the local monopolist towards lower valuations and exerts pressure on the local monopolist to reduce his price. Despite this effect, offering the monopoly price remains weakly optimal in equilibrium.
2021
2021
Auster, Sarah; Kos, Nenad; Piccolo, Salvatore
File in questo prodotto:
File Dimensione Formato  
Preprint.pdf

non disponibili

Descrizione: article
Tipologia: Pdf editoriale (Publisher's layout)
Licenza: NON PUBBLICO - Accesso privato/ristretto
Dimensione 289.72 kB
Formato Adobe PDF
289.72 kB Adobe PDF   Visualizza/Apri

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11565/4042481
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 0
  • ???jsp.display-item.citation.isi??? 0
social impact