Abstract : Reductions in search costs are generally found to increase efficiency and welfare. Using a simple search model we show that when an upstream firm incurs a search cost to identify a potential trading partner and the two parties then negotiate the wholesale price, a reduction in search cost can actually reduce welfare. Furthermore, in a market driven by seller search, a search cost of zero is never socially optimal.
https://halshs.archives-ouvertes.fr/halshs-01806502
Contributeur : Anne L'Azou
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Soumis le : dimanche 3 juin 2018 - 10:23:20
Dernière modification le : mardi 5 mars 2019 - 18:34:06
Zhiwen Li, Michael Arnold, Thierry Pénard. How Increasing Supplier Search Cost Can Increase Welfare. B.E. Journal in Theoretical Economics, Topics in Theoretical Economics, De Gruyter, 2017, 18 (1), 〈10.1515/bejte-2016-0048〉. 〈halshs-01806502〉
