Suchergebnisse

This paper presents a sequential search model where consumers look for several products from multiproduct firms. Multiproduct search can significantly influence firms' pricing decisions. For example, it can make market prices decrease with search costs. Possible applications of the model are also discussed. (JEL D11, D43, D83)

This paper studies competition between firms when consumers observe a private signal of their preferences over products. Within the class of signal structures that induce pure-strategy pricing equilibria, we derive signal structures that are optimal for firms and those that are optimal for consumers. The firm-optimal policy amplifies underlying product differentiation, thereby relaxing competition, while ensuring consumers purchase their preferred product, thereby maximizing total welfare. The consumer-optimal policy dampens differentiation, which intensifies competition, but induces some consumers to buy their less preferred product. Our analysis sheds light on the limits to competition when the information possessed by consumers can be designed flexibly. (JEL D11, D21, D43, D82, D83, L13)

ABSTRACTWe examine the FDI versus exports decision of a multiproduct multinational firm which supplies vertically differentiated products, and show that the proximity‐concentration trade‐off can generate FDI‐export coexistence, i.e., the firm supplies the low‐quality products through FDI and the high‐quality products through exports. We also show that the opposite can never happen. Moreover, when the multiproduct multinational firm faces price competition in the target markets, it has an incentive to use trade costs to soften price competition, which can reduce its FDI incentive.

This article examines the implications of "prominence" in search markets. We model prominence by supposing that the prominent firm will be sampled first by all consumers. If there are no systematic quality differences among firms, we find that the prominent firm will charge a lower price than its less prominent rivals. Making a firm prominent will typically lead to higher industry profit but lower consumer surplus and welfare. The model is extended by introducing heterogeneous product qualities, in which case the firm with the highest‐quality product has the greatest incentive to become prominent, and making it prominent will boost industry profit, consumer surplus, and welfare.