Experience Goods and Consumer Search

B-Tier
Journal: American Economic Journal: Microeconomics
Year: 2022
Volume: 14
Issue: 3
Pages: 591-621

Authors (3)

Yongmin Chen (not in RePEc) Zhuozheng Li (not in RePEc) Tianle Zhang (Lingnan University)

Score contribution per author:

0.670 = (α=2.01 / 3 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We introduce a search model where products differ in horizontal attributes and unobserved quality ("experience goods"), and firms can establish quality reputation. We show that the inability of consumers to observe quality before purchase significantly changes how search frictions affect market performance. In equilibrium, higher search costs reduce match values and increase price but can boost firms' investment in product quality. Under plausible conditions, both consumer and total welfare initially increase in search cost, whereas both would monotonically decrease if quality were observable from search. We apply the analysis to online markets, where low search costs coexist with low-quality products.

Technical Details

RePEc Handle
repec:aea:aejmic:v:14:y:2022:i:3:p:591-621
Journal Field
General
Author Count
3
Added to Database
2026-01-25