Search and ripoff externalities

• Autores: Mark Armstrong
• Localización: Review of Industrial Organization, ISSN-e 1573-7160, Vol. 47, Nº. 3, 2015, págs. 273-302
• Idioma: inglés
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• Resumen

  • This paper surveys models of markets in which only some consumers are “savvy”. I discuss when the presence of savvy consumers improves the deals available to all consumers (the case of search externalities), and when the non-savvy consumers fund generous deals for all consumers (ripoff externalities). I also discuss when the two groups of consumers have aligned or divergent views about market interventions. The analysis focusses on two kinds of models: (1) an indivisible product in a market with price dispersion; and (2) products that involve add-on pricing