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Talking, searching, and pricing

Galeotti, A (2010) 'Talking, searching, and pricing.' International Economic Review, 51 (4). 1159 - 1174. ISSN 0020-6598

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I study the implications of interpersonal communication for incentives for consumers to acquire information and firms' pricing behavior. Firms market a homogeneous product and choose its price; consumers acquire price information at some cost to themselves. Also, each consumer accesses the information acquired by a sample of other consumers-interpersonal communication. An exogenous increase in the level of interpersonal communication decreases the information that consumers acquire, and, when search costs are low, firms price less aggressively. In an extension, consumers may choose to invest in interpersonal communication at some cost. A decrease in the costs of interpersonal communication decreases firms' competition. © (2010) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Item Type: Article
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Jim Jamieson
Date Deposited: 16 Jul 2012 14:33
Last Modified: 23 Jan 2019 00:15

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