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arXiv · 2302.06580

Comparison Shopping: Learning Before Buying From Duopolists

Brian C. Albrecht·Mark Whitmeyer
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Abstract

We explore a model of duopolistic competition in which consumers learn about the fit of each competitor's product. In equilibrium, consumers comparison shop: they learn only about the relative values of the products. When information is cheap, increasing the cost of information decreases consumer welfare; but when information is expensive, this relationship flips. As information frictions vanish, there is a limiting equilibrium that is ex post efficient.

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Brian C. Albrecht, Mark Whitmeyer. 2023-02-13. Comparison Shopping: Learning Before Buying From Duopolists. https://arxiv.org/abs/2302.06580

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