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Discussion Paper Details

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Full Details

Title: Search, Showrooming, and Retailer Variety

Author(s): Heski Bar-Isaac and Sandro Shelegia

Publication Date: November 2020

Keyword(s): consumer search, Pricing, Retailer Variety and Showrooming

Programme Area(s): Industrial Organization

Abstract: In a model of consumer search, we trace through effects of changes in retail variety. Some consumers visit stores that offer many products that are imperfect substitutes, learn which product they like most, and then buy it elsewhere. These showroomers put upward pressure on prices elsewhere because they populate the market with consumers who know their preferences, in the style of the Diamond paradox (Diamond (1971)). Changes in retail variety affect search behaviour and all market outcomes. One change that we examine is the introduction of a shopping venue where prices are readily available but product information is not.

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Bibliographic Reference

Bar-Isaac, H and Shelegia, S. 2020. 'Search, Showrooming, and Retailer Variety'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=15448