Beliefs and consumer search in a vertical industry
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- dc.contributor.author Janssen, Maarten
- dc.contributor.author Shelegia, Sandro
- dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
- dc.date.accessioned 2020-05-25T09:26:56Z
- dc.date.available 2020-05-25T09:26:56Z
- dc.date.issued 2018-03-20
- dc.date.modified 2020-05-25T09:25:35Z
- dc.description.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 assign just a small probability to the event that the upstream manufacturer is responsible for the deviation, equilibrium predictions are qualitatively dierent. For the robust beliefs, the vertical model can explain a variety of observations, such as retail price rigidity (or, alternatively, low cost pass-through), non-monotonicity 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.
- dc.format.mimetype application/pdf*
- dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=1605
- dc.identifier.citation
- dc.identifier.uri http://hdl.handle.net/10230/44725
- dc.language.iso eng
- dc.relation.ispartofseries Economics and Business Working Papers Series; 1605
- dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
- dc.rights.accessRights info:eu-repo/semantics/openAccess
- dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
- dc.subject.keyword vertical relations
- dc.subject.keyword consumer search
- dc.subject.keyword double marginalization
- dc.subject.keyword product differentiation
- dc.subject.keyword price rigidities
- dc.subject.keyword Business Economics and Industrial Organization
- dc.title Beliefs and consumer search in a vertical industry
- dc.title.alternative
- dc.type info:eu-repo/semantics/workingPaper