*We thank Robert de Jong, Saul Lach, Huanxing Yang, Lixin Ye, and three anonymous referees for this journal for their comments and suggestions. David Knapp provided outstanding research assistance. All conclusions and/or errors are solely the responsibility of the authors.
WHEN DO CONSUMERS SEARCH?*
Article first published online: 27 SEP 2011
© 2011 The Authors. The Journal of Industrial Economics © 2011 Blackwell Publishing Ltd and the Editorial Board of The Journal of Industrial Economics
The Journal of Industrial Economics
Volume 59, Issue 3, pages 457–483, September 2011
How to Cite
LEWIS, M. S. and MARVEL, H. P. (2011), WHEN DO CONSUMERS SEARCH?. The Journal of Industrial Economics, 59: 457–483. doi: 10.1111/j.1467-6451.2011.00459.x
- Issue published online: 27 SEP 2011
- Article first published online: 27 SEP 2011
This paper provides empirical evidence relating search to price movements. We measure consumer search directly from traffic statistics for web sites that report gasoline prices. We show empirically that consumers search more as prices rise than they do when prices fall. Asymmetric search patterns have consequences for price behavior. Our findings indicate that retail margins are squeezed by increased search. In addition, we show that there is more price dispersion when prices are falling than when prices are either stable or rising. Our results provide a search-based explanation for the ‘rockets and feathers’ phenomenon of asymmetric price adjustment.