Chapter 12: Price search and obfuscation: an overview of the theory and empirics
This chapter focuses on the topic of price search, both the theory and empirics of the broad notion first motivated by Stigler in 1961. I present results from some of the standard models of price search and discuss empirical analyses that either test those models in retail markets or exploit structure in those models to derive estimates of quantities of interest, such as search costs. I also discuss a more recent and growing literature on price obfuscation, or the actions that firms take to make price search more costly. Finally, I touch on how retail price search has changed with advances in technology. One broad goal is to lay out a useful theoretical framework for assessing markets where search costs are an important feature. A second is to discuss the empirical evidence from retail markets on price search costs. Along the way, I also indicate the different styles of empirical work and discuss their roles in improved understanding of these phenomena.
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