Title

Intermediaries and consumer search

Document Type

Journal article

Source Publication

International Journal of Industrial Organization

Publication Date

8-2017

Volume

Advance online publication

Publisher

Elsevier BV

Keywords

Consumer search, Intermediary, Search engine, Search platform, Online marketplace, Vertical differentiation

Abstract

This paper discusses how intermediaries, such as a search engine and an online marketplace, may affect consumer search. We propose an analytical framework that encompasses several models of search for differentiated products, with a high-quality firm being more likely to offer a product that meets each consumer’s need. An intermediary improves consumer search efficiency by providing a search platform on which positions are sold to high-quality firms through competitive bidding. While the intermediary may admit too many or too few firms to its platform, compared to what would maximize consumer surplus or total welfare, its presence can nevertheless benefit consumers and improve welfare. However, the intermediary may reduce search efficiency when firms are differentiated only horizontally, when they sell experience or credence goods, or when the intermediary is biased (possibly due to vertical integration).

DOI

10.1016/j.ijindorg.2017.08.001

Print ISSN

01677187

Publisher Statement

Copyright © 2017 Elsevier B.V. All rights reserved.

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Full-text Version

Publisher’s Version

Recommended Citation

Chen, Y., & Zhang, T. (2017). Intermediaries and consumer search. International Journal of Industrial Organization. Advance online publication. doi: 10.1016/j.ijindorg.2017.08.001