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Analysis on the Dominance of Search Cost in Affecting Price Dispersion
- 1 Soochow University, Suzhou, 215021, China
- 2 University College London, London, WC1E 6BT, United Kingdom
- 3 The Affiliated International School of Shenzhen University, Shenzhen, 518054, China
* Author to whom correspondence should be addressed.
Abstract
The prevalent phenomenon of price dispersion in goods which was initially proposed by Stigler in 1961, is held accountable for the constantly increasing trading frictions in markets especially with the development of e-commerce, as a violation of the law of one price. This study illustrates how price dispersion is affected by search cost, particularly concerning three specific branches respectively- asymmetric information, customer heterogeneity, and consumer confusion. Analyzing 25 papers chronologically reinforced the causal relationship between these three factors and the level of search cost induced, also with illustrations of how three specific branches within search cost each variously contributes to the occurrence of price dispersion will be provided in this paper. Nevertheless, the extent to which limitations in each branch in affecting price dispersion will be provided. As a result, this paper aims to produce a balanced view of the ways search cost acts as the dominant factor in affecting price dispersion.
Keywords
Customer Heterogeneity, Price Dispersion, Consumer Confusion., Asymmetric Information, Search Cost
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Cite this article
Han,Y.;Wu,J.;Chen,Y. (2023). Analysis on the Dominance of Search Cost in Affecting Price Dispersion. Advances in Economics, Management and Political Sciences,3,663-670.
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