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Search, Showrooming, and Retailer Variety

Author

Listed:
  • Heski Bar-Isaac

    (Rotman School of Management, University of Toronto, Toronto, Ontario M5S 3E6, Canada; Center for Economic and Policy Research, London EC1V 0DX, United Kingdom)

  • Sandro Shelegia

    (Center for Economic and Policy Research, London EC1V 0DX, United Kingdom; Department of Economics and Business, Pompeu Fabra University, 08002 Barcelona, Spain; Barcelona School of Economics, 08005 Barcelona, Spain)

Abstract
Pricing depends on the selection of consumers and the way that they search. Consumers who search for prices, paradoxically, impose no discipline on prices. Instead, searching for match information does. Showrooming disciplines prices at deep stores (where consumers can learn about many goods in a category). It also leads shallow stores, where showroomers buy, to face a larger fraction of consumers who are insensitive to price. The overall effect of more showrooming can be to raise or lower prices. It depends on the kinds of consumers who showroom. Similarly, a price-only channel can have ambiguous effects.

Suggested Citation

  • Heski Bar-Isaac & Sandro Shelegia, 2023. "Search, Showrooming, and Retailer Variety," Marketing Science, INFORMS, vol. 42(2), pages 251-270, March.
    • Handle: RePEc:inm:ormksc:v:42:y:2023:i:2:p:251-270
    DOI: 10.1287/mksc.2022.1376
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    References listed on IDEAS

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    Cited by:

    1. Bergemann, Dirk & Bonatti, Alessandro & Wu, Nick, 2023. "How Do Digital Advertising Auctions Impact Product Prices?," CEPR Discussion Papers 18346, C.E.P.R. Discussion Papers.
    2. Dirk Bergemann & Alessandro Bonatti, 2024. "Data, Competition, and Digital Platforms," American Economic Review, American Economic Association, vol. 114(8), pages 2553-2595, August.
    3. Dirk Bergemann & Alessandro Bonatti & Nicholas Wu, 2023. "Managed Campaigns and Data-Augmented Auctions for Digital Advertising," Cowles Foundation Discussion Papers 2359, Cowles Foundation for Research in Economics, Yale University.

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    More about this item

    Keywords

    consumer search; pricing; retailer variety; showrooming;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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