Consumer Search, Market Characteristics, and Price Dispersion: New Evidence from the Retail Markets for Prescription Drugs

2014 ◽  
Vol 36 (8) ◽  
pp. 545-558 ◽  
Author(s):  
Jihui Chen
Keyword(s):  
Prescription Drugs ◽  
Price Dispersion ◽  
Consumer Search ◽  
Retail Markets ◽  
Search Market ◽  
New Evidence

scholarly journals Beliefs and Consumer Search in a Vertical Industry

2019 ◽  
Vol 18 (5) ◽  
pp. 2359-2393 ◽  
Author(s):  
Maarten Janssen ◽  
Sandro Shelegia
Keyword(s):  
Low Cost ◽  
Search Costs ◽  
Retail Price ◽  
Consumer Search ◽  
Common Assumption ◽  
Vertical Relations ◽  
Retail Prices ◽  
The Common ◽  
Search Market ◽  
Pass Through

Abstract This paper studies vertical relations in a search market. As the wholesale arrangement between a manufacturer and its retailers is typically unobserved by consumers, their beliefs about who is to be blamed for a price deviation play a crucial role in determining wholesale and retail prices. The common assumption in the consumer search literature is that consumers exclusively blame an individual retailer for a price deviation. We show that in the vertical relations context, predictions based on this assumption are not robust in the sense that if consumers hold the upstream manufacturer at least partially responsible for the deviation, equilibrium predictions are qualitatively different. For robust beliefs, the vertical model can explain a variety of observations, such as retail price rigidity (or, alternatively, low cost pass-through), nonmonotonicity of retail prices in search costs, and (seemingly) collusive retail behavior. The model can be used to study a monopoly online platform that sells access to final consumers.

scholarly journals Fairtrade Wine Price Dispersion in the United Kingdom

2017 ◽  
Vol 12 (4) ◽  
pp. 446-456 ◽  
Author(s):  
Britta Niklas ◽  
Karl Storchmann ◽  
Nick Vink
Keyword(s):  
United Kingdom ◽  
Least Squares ◽  
Price Dispersion ◽  
Ordinary Least Squares ◽  
Consumer Search ◽  
Lower Price ◽  
Weak Instruments ◽  
The United Kingdom ◽  
Substantial Bias ◽  
Squared Residuals

AbstractThis paper analyzes wine price dispersion in the United Kingdom. In particular, we are interested in examining whether Fairtrade wines are different from non-Fairtrade wines. Because Fairtrade wines serve an additional social purpose, one may think that consumers search less aggressively for the outlet with the lowest price, thus allowing for a larger price dispersion than for regular wines. We draw on data for about seven thousand wines from South Africa, Fairtrade and non-Fairtrade, sold in the United Kingdom between 2007 and 2012. In a first step, we run a hedonic regression model explaining the wine prices using Ordinary Least Squares (OLS) and Two-Stage Least Squares (2SLS) Instrumental Variable (IV) approaches. In the next step, we regress the squared residuals from the first step on a Fairtrade 0-1 dummy-variable. When using the squared residuals from the OLS model, we find that Fairtrade is a negative determinant of price dispersion. Therefore, Fairtrade wines exhibit a significant lower price dispersion than the comparison group. When using the squared residuals from the IV model, we find mixed results and suspect the presence of a substantial bias due to weak instruments. Finally, in order to avoid IV pitfalls, we ran Fairtrade and Non-Fairtrade wines in separate equations. We find support for the OLS results, i.e., Fairtrade wines appear to exhibit lower price dispersion than their non-Fairtrade counterparts. Whether this is due to consumer search is a priori unclear. (JEL Classifications: L31, L81, Q11)

Does Competition Reduce Price Dispersion? New Evidence from the Airline Industry

2009 ◽  
Vol 117 (1) ◽  
pp. 1-37 ◽  
Author(s):  
Kristopher S. Gerardi ◽  
Adam Hale Shapiro
Keyword(s):  
Airline Industry ◽  
Price Dispersion ◽  
New Evidence

Optimal Pricing Strategy in the Case of Price Dispersion: New Evidence from the Tokyo Housing Market

2012 ◽  
Vol 40 ◽  
pp. S234-S272 ◽  
Author(s):  
Yongheng Deng ◽  
Stuart A. Gabriel ◽  
Kiyohiko G. Nishimura ◽  
Diehang Della Zheng
Keyword(s):  
Housing Market ◽  
Price Dispersion ◽  
Pricing Strategy ◽  
Optimal Pricing ◽  
Optimal Pricing Strategy ◽  
New Evidence
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