Ordered Search in Differentiated Markets

This paper presents an ordered search model in which consumers search both for price and product fitness. We show that there is price dispersion in equilibrium and prices rise in the order of search. The top firms in consumer search order, though charge lower prices, earn higher profits due to their larger market shares.non-random search, price dispersion, product differentiation

Unified anisotropic elastoplastic model for sand

This paper presents a unified approach to model the influence of fabric anisotropy and its evolution on both the elastic and plastic responses of sand. A physically based fabric tensor is employed to characterize the anisotropic internal structure of sand. It is incorporated into the nonlinear elastic stiffness tensor to describe anisotropic elasticity, and is further included explicitly in the yield function, the dilatancy relation, and the flow rule to characterize the anisotropic plastic sand response. The physical change of fabric with loading is described by a fabric evolution law driven by plastic strain, which influences both the elastic and the plastic sand behavior. The proposed model furnishes a comprehensive consideration of both anisotropic elasticity and anisotropic plasticity, particularly the nonlinear change of elastic stiffness with the evolution of fabric during the plastic deformation of sand. It offers a natural and rational way to capture the noncoaxial behavior in sand caused by anisotropy. It also facilitates easy determination of the initial anisotropy in sand based on simple laboratory tests and avoids the various arbitrary assumptions on its value made by many previous studies. The model predictions on sand behavior compare well with test data

Cyclic Loading and Fabric Evolution in Sand: A Constitutive Investigation

An anisotropic plasticity model is proposed to describe the effect of fabric and fabric evolution on the cyclic behaviour of sand within the framework of anisotropic critical state theory. The model employs a cone-shaped bounding surface in the deviatoric stress space and a yield cap perpendicular to the mean stress axis to describe sand behaviour in constant-mean-stress shear and constant-stress-ratio compression, respectively. The model considers a fabric tensor characterizing the internal structure of sand associated with the void space system which evolves with plastic deformation. The fabric evolution law is assumed to render the fabric tensor to become co-directional with the loading direction tensor and to reach a constant magnitude of unit at the critical state. In constant-stress-ratio compres-sion, the final degree of anisotropy is proportional to a normalized stress ratio. An anisotropic variable defined by a joint invariant of the fabric tensor and the loading direction tensor is employed to describe the fabric effect on sand behaviour in constant-mean-stress monotonic and cyclic shear. Good comparison is found between the model simulations and test results on Toyoura sand in both monotonic and cyclic loadings with a single set of parameters

Paying for prominence

We investigate three ways in which firms can become "prominent" and thereby influence the order in which consumers consider options. First, firms can affect an intermediary's sales efforts by means of commission payments. When firms pay commission to a salesman, the salesman promotes the product with the highest commission, and steers ignorant consumers towards the more expensive product. Second, sellers can advertise prices on a price comparison website, so that consumers investigate the suitability of products in order of increasing price. In such a market, equilibrium prices are lower when search costs are higher since a firm's benefit from being investigated first increases with search costs. Finally, consumers might first consider their existing supplier when they purchase a new product, which suggests a relatively benign rationale for the prevalence of cross-selling in markets such as retail banking.Consumer search, e-commerce, price comparison websites, cross-selling, mis-selling, commission sales.

Ordered Search in Differentiated Markets

This note presents an ordered search model in which consumers search both for price and product fitness. We construct an equilibrium in which there is price dispersion and prices rise in the order of search. The top firms in consumer search process, though charge lower prices, earn higher profits due to their larger market shares.Search, price dispersion, product differentiation.

Conditioning prices on search behaviour

We consider a market in which firms can partially observe each consumer's search behavior in the market. In our main model, a firm knows whether a consumer is visiting it for the first time or whether she is returning after a previous visit. Firms have an incentive to offer a lower price on a first visit than a return visit, so that new consumers are offered a "buy-now" discount. The ability to offer such discounts acts to raise all prices in the market. If firms cannot commit to their buy-later price, in many cases firms make "exploding" offers, and consumers never return to a previously sampled firm. Likewise, if firms must charge the same price to all consumers, regardless of search history, we show that they sometimes have the incentive to make exploding offers. We also consider other ways in which firms could use information about search behaviour to determine their prices.Consumer search; oligopoly; price discrimination; high-pressure selling; exploding offers; costly recall

Consumer behavioural biases in competition: A survey

This is a survey of studies that examine competition in the presence of behaviourally biased or boundedly rational consumers. It will tackle questions such as: How does competition and pricing change when consumers are biased? Can inefficiencies that arise from consumer behavioural biases be mitigated by lowering barriers to entry? Do biased consumers make rational ones better or worse off? And will biased consumer behaviour be overcome through learning or education?Behavioural Economics, Industrial Organization, Biased Consumers

Exploding offers and buy-now discounts

We consider a market with sequential consumer search in which firms can distinguish potential customers visiting for the first time from returning visitors. We show that firms often have an incentive to make it costly for its visitors to return after investigating rivals, either by making an "exploding offer" (which permits no return once the consumer leaves) or by offering a "buy-now discount" (which makes the price paid by first-time visitors lower than that for returning visitors). Prices often increase when return costs are artificially increased in this manner, and this harms consumers and market performance. If firms cannot commit to their buy-later price the outcome depends on whether there is an intrinsic cost of returning to a firm: if the intrinsic return cost is zero, it is often an equilibrium for firms not to offer any buy-now discount; if the return cost is positive, firms are forced to make exploding offers.Consumer search; oligopoly; price discrimination; high-pressure selling; buy-now discounts; costly recall

Exploding Offers and Buy-Now Discounts

A common sales tactic is for a seller to encourage a potential customer to make her purchase decision quickly. We consider a market with sequential consumer search in which firms often encourage first-time visitors to buy immediately, either by making an “exploding offer” (which permits no return once the consumer leaves) or by offering a “buy-now discount” (which makes the price paid for immediate purchase lower than the regular price). Prices often increase when these policies are used. If firms cannot commit to their sales policy, the outcome depends on whether consumer incur an intrinsic cost of returning to a firm: if there is no such return cost, it is often an equilibrium for firms to offer a uniform price to both first-time and returning visitors; if the return cost is positive, however, firms are forced to make exploding offers.Consumer search, oligopoly, price discrimination, high-pressure selling, exploding offers, buy-now discounts, costly recall.

Prominence and Consumer Search: The Case With Multiple Prominent Firms

This paper extends Armstrong, Vickers, and Zhou (2007) to the case with multiple prominent firms. All consumers first search among prominent firms, and if their products are not satisfactory, they continue to search among non-prominent ones. Prominent firms will charge a lower price than their non-prominent rivals as in the case with a single prominent firm, but relative to the situation without any prominent firm, the presence of more than one prominent firm can induce all firms to raise their prices. We also characterize how market prices and welfare vary with the number of prominent firms.consumer search, marketing, prominence, product differentiation