Entry and Welfare in Search Markets

被引:15
作者
Chen, Yongmin
Zhang, Tianle
机构
[1] Univ Colorado, Boulder, CO 80309 USA
[2] Zhejiang Univ, Hangzhou, Zhejiang, Peoples R China
[3] Lingnan Univ, Tuen Mun, Hong Kong, Peoples R China
关键词
MONOPOLISTIC COMPETITION; CONSUMER SEARCH; PRICE; QUALITY; NUMBER; COSTS; MODEL;
D O I
10.1111/ecoj.12412
中图分类号
F [经济];
学科分类号
02 ;
摘要
The welfare effects of entry are studied in a model of consumer search. Potential entrants differ in quality, with high-quality sellers being more likely to meet consumer needs. Contrary to the standard view in economics that more entry benefits consumers, we find that free entry is excessive for both consumer welfare and total welfare when entry cost is relatively low, and consumer welfare has an inverted-U relationship with entry cost. We explain why these results may arise naturally in search markets due to the search variety and search quality effects of entry, and discuss their business and policy implications.
引用
收藏
页码:55 / 80
页数:26
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