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Institute of Social and Economic Research Discussion Papers. 2019, 1024, p. 1-33

Multiproduct Firms, Consumer Search, and Demand Heterogeneity

Kittaka, Yuta

The Institute of Social and Economic Research, Osaka University

英語

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2019-10

https://www.iser.osaka-u.ac.jp/static/resources/docs/dp/2018/DP1024R.pdf

March 2018. Revised October 2019.

This study constructs a consumer search model in which some consumers search for multiple products, whereas others search for a single product. A price difference arises because of a difference in the price elasticity for each group. We show that a positive demand shock to one of the products decreases the price of another product, whereas it increases its own price, and a negative correlation between the demands for each product strengthens these tendencies. Both prices decrease, however, following a positive demand shock when the demands for each product are positively correlated. We also show that multiproduct firms set a relatively high price for a more demanded product, as such a product's price tends to be more elastic with respect to search costs. A price difference between products increases as the demand gap between products increases or as economies of scale in search increase.

68196

Multiproduct Firms, Consumer Search, and Demand Heterogeneity

Kittaka, Yuta

The Institute of Social and Economic Research, Osaka University

英語

2019-10

Institute of Social and Economic Research Discussion Papers

1024

1

33

https://hdl.handle.net/11094/68196

https://www.iser.osaka-u.ac.jp/static/resources/docs/dp/2018/DP1024R.pdf