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Variety and the Cost of Search in Supermarket Retailing.

Authors :
Richards, Timothy
Hamilton, Stephen
Yonezawa, Koichi
Source :
Review of Industrial Organization; May2017, Vol. 50 Issue 3, p263-285, 23p
Publication Year :
2017

Abstract

We examine search costs and product variety among multi-product retailers. Search costs may rise in variety, because consumers have more alternatives to consider, but may fall on the margin as product variety allows better matches between consumers and brands. We estimate a hierarchical model that disentangles the effect of variety on brand and store search costs. Our findings reveal that search costs within each store rise in product variety, suggesting that retailers reduce consumer search by offering deeper product assortments. But, the cost of searching among stores falls in product variety, which limits the exercise of market power. [ABSTRACT FROM AUTHOR]

Details

Language :
English
ISSN :
0889938X
Volume :
50
Issue :
3
Database :
Complementary Index
Journal :
Review of Industrial Organization
Publication Type :
Academic Journal
Accession number :
122421568
Full Text :
https://doi.org/10.1007/s11151-016-9535-y