Competition, pricing, and product entry in markets with costly search
Abstract/Contents
- Abstract
- In the first chapter of this paper, I study how much consumers benefit from new products in markets with information frictions. I analyze new products in the U.S. hard drive market, a market with ample product innovation. Using unique browsing data, I measure the magnitude of two frictions, limited consideration and costly search, and show that both play a crucial role in shaping consumer demand. Omitting these frictions from analysis makes the researcher underestimate consumer surplus from new hard drives, as it appears that consumers do not like the attributes these hard drives offer. Partly eliminating frictions substantially increases consumers' ability to benefit from new hard drives. In the second chapter, I study the estimation of preference heterogeneity in markets where consumers engage in costly search to learn product characteristics. Costly search amplifies the way consumer preferences translate into purchase probabilities, generating a seemingly large degree of preference heterogeneity. We develop a search model that allows for flexible heterogeneity in preferences and estimate its parameters using a unique panel dataset on the search and purchase behavior of consumers. The estimation results reveal that when search costs are ignored, the model overestimates standard deviations of product intercepts by 68%. We show that the bias in heterogeneity estimates leads to incorrect inference about price elasticities and seller markups and has important consequences for targeted marketing
Description
| Type of resource | text |
|---|---|
| Form | electronic resource; remote; computer; online resource |
| Extent | 1 online resource |
| Place | California |
| Place | [Stanford, California] |
| Publisher | [Stanford University] |
| Copyright date | 2020; ©2020 |
| Publication date | 2020; 2020 |
| Issuance | monographic |
| Language | English |
Creators/Contributors
| Author | Morozov, Ilya |
|---|---|
| Degree supervisor | Bronnenberg, Bart J |
| Degree supervisor | Seiler, Stephan, (Assistant professor of marketing) |
| Thesis advisor | Bronnenberg, Bart J |
| Thesis advisor | Seiler, Stephan, (Assistant professor of marketing) |
| Thesis advisor | Narayanan, Sridhar, 1970- |
| Thesis advisor | Reiss, Peter C. (Peter Clemens) |
| Degree committee member | Narayanan, Sridhar, 1970- |
| Degree committee member | Reiss, Peter C. (Peter Clemens) |
| Associated with | Stanford University, Graduate School of Business. |
Subjects
| Genre | Theses |
|---|---|
| Genre | Text |
Bibliographic information
| Statement of responsibility | Ilya Morozov |
|---|---|
| Note | Submitted to the Graduate School of Business |
| Thesis | Thesis Ph.D. Stanford University 2020 |
| Location | electronic resource |
Access conditions
- Copyright
- © 2020 by Ilya Morozov
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