Search and Ripoff Externalities

Search and Ripoff Externalities This paper surveys models of markets in which only some consumers are “savvy”. I discuss when the presence of savvy consumers improves the deals available to all consumers (the case of search externalities), and when the non-savvy consumers fund generous deals for all consumers (ripoff externalities). I also discuss when the two groups of consumers have aligned or divergent views about market interventions. The analysis focusses on two kinds of models: (1) an indivisible product in a market with price dispersion; and (2) products that involve add-on pricing. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Search and Ripoff Externalities

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Publisher
Springer US
Copyright
Copyright © 2015 by Springer Science+Business Media New York
Subject
Economics / Management Science; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-015-9480-1
Publisher site
See Article on Publisher Site

Abstract

This paper surveys models of markets in which only some consumers are “savvy”. I discuss when the presence of savvy consumers improves the deals available to all consumers (the case of search externalities), and when the non-savvy consumers fund generous deals for all consumers (ripoff externalities). I also discuss when the two groups of consumers have aligned or divergent views about market interventions. The analysis focusses on two kinds of models: (1) an indivisible product in a market with price dispersion; and (2) products that involve add-on pricing.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Aug 21, 2015

References

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