Citation

Discussion Paper Details

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Title: Ordered Consumer Search

Author(s): Mark Armstrong

Publication Date: October 2016

Keyword(s): advertising, consumer search, directed search, discrete choice, obfuscation, oligopoly, ordered search and sequential search

Programme Area(s): Industrial Organization

Abstract: The paper discusses situations in which consumers search through their options in a deliberate order, in contrast to more familiar models with random search. Topics include: the existence of ordered search equilibria with symmetric sellers (all consumers first inspect the seller they anticipate sets the lowest price, and a seller which is inspected first by consumers will set the lowest price); the use of price and non-price advertising to direct search; the impact of consumers starting a new search at their previous supplier; and the incentive a seller can have to raise its own search cost. I also show how ordered search can be reformulated as a simpler discrete choice problem without search frictions or dynamic decision making.

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Bibliographic Reference

Armstrong, M. 2016. 'Ordered Consumer Search'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=11566