SEMI-NONPARAMETRIC ESTIMATION OF CONSUMER SEARCH COSTS
Article first published online: 26 JUN 2012
Copyright © 2012 John Wiley & Sons, Ltd.
Journal of Applied Econometrics
Volume 28, Issue 7, pages 1205–1223, November/December 2013
How to Cite
Moraga-González, J. L., Sándor, Z. and Wildenbeest, M. R. (2013), SEMI-NONPARAMETRIC ESTIMATION OF CONSUMER SEARCH COSTS. J. Appl. Econ., 28: 1205–1223. doi: 10.1002/jae.2290
- Issue published online: 25 NOV 2013
- Article first published online: 26 JUN 2012
- Manuscript Revised: 5 MAR 2012
- Manuscript Received: 20 OCT 2010
This paper studies the estimation of the distribution of non-sequential search costs. We show that the search cost distribution is identified by combining data from multiple markets with common search technology but varying consumer valuations, firms' costs, and numbers of competitors. To exploit such data optimally, we provide a new method based on semi-nonparametric estimation. We apply our method to a dataset of online prices for memory chips and find that the search cost density is essentially bimodal, such that a large fraction of consumers searches very little, whereas a smaller fraction searches a relatively large number of stores. Copyright © 2012 John Wiley & Sons, Ltd.