Pricing, Consumer Search and the Size of Internet Markets

摘要: textabstractDespite the mixed empirical evidence, many economists still hold to view that Internet will promote competition between firms, thereby lowering prices and increasing economic welfare. This paper presents a search model provides different view. We analyze market for homogeneous good where some consumers are fully informed while others not. Depending on parameter values, there may be three types of equilibria comparative statics results each these equilibria. For example, reduction in cost raise equilibrium when consumers' intensity is low, but reduce high. These explain evidence found so far.