
The existing studies on consumer search agree that consumers are worse-off when they do not observe sellers' production marginal cost than when they do. In this paper we challenge this conclusion. Employing a canonical model of simultaneous search, we show that it may be favorable for consumer to not observe the production marginal cost. The reason is that, in expectation, consumer search more intensely when they do not know sellers' production marginal cost than when they know it. More intense search imposes higher competitive pressure on sellers, which in turn benefits consumers through lower prices.
FOS: Economics and business, L13, Consumer Search, D83, 330, ddc:330, Information Asymmetry, Economics - Theoretical Economics, Theoretical Economics (econ.TH), Price Competition, D43
FOS: Economics and business, L13, Consumer Search, D83, 330, ddc:330, Information Asymmetry, Economics - Theoretical Economics, Theoretical Economics (econ.TH), Price Competition, D43
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