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.
Access to external full text or publisher's version may require subscription.
Full-text Version
Publisher’s Version
Language
English
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
