The Double Diamond Paradox

We study vertical relations in markets with consumer and retailer search. We obtain three important new results. First, we provide a novel explanation for price dispersion that does not depend on some form of heterogeneity among consumers. Price dispersion takes on the form of a bimodal distribution. Second, under competitive conditions (many retailers or small consumer search cost), social welfare is significantly smaller than in the double marginalization outcome. Manufacturers' regular price is significantly above the monopoly price, squeezing retailers' markups and providing an alternative explanation for incomplete cost pass-through. Third, firms' prices are decreasing in consumer search cost. (JEL D11, D21, D43, D83, L13, L60, L81)

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Asymmetric cost pass-through and consumer search: empirical evidence from online platforms

Quantitative Marketing and Economics ◽

10.1007/s11129-021-09233-2 ◽

2021 ◽

Author(s):

Sven Heim

Keyword(s):

Empirical Evidence ◽

Consumer Search ◽

Online Platforms ◽

Asymmetric Cost ◽

Pass Through

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Consumer Search, Incomplete Exchange Rate Pass‐Through, and Optimal Interest Rate Policy

Journal of money credit and banking ◽

10.1111/jmcb.12518 ◽

2018 ◽

Vol 51 (2-3) ◽

pp. 455-484 ◽

Cited By ~ 2

Author(s):

DUDLEY COOKE

Keyword(s):

Exchange Rate ◽

Interest Rate ◽

Consumer Search ◽

Interest Rate Policy ◽

Rate Policy ◽

Pass Through ◽

Exchange Rate Pass Through

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Consumer Search and Filtering on Online Retail Platforms

Journal of Marketing Research ◽

10.1177/0022243720928367 ◽

2020 ◽

Vol 57 (5) ◽

pp. 900-916

Author(s):

Baojun Jiang ◽

Tianxin Zou

Keyword(s):

Consumer Search ◽

Third Party ◽

Demand Elasticity ◽

Search Cost ◽

Online Retail ◽

The Third ◽

Retail Prices ◽

The Third Party

This article examines how the consumer’s search cost and filtering on a retail platform affect the platform, the third-party sellers, and the consumers. The authors show that, given the platform’s percentage referral fee, a lower search cost can either increase or decrease the platform’s profit. By contrast, if the platform optimally adjusts its referral fee, a lower search cost will increase the platform’s profit. As the consumer’s search cost decreases, if the platform’s demand elasticity increases significantly, the platform should reduce its fee, potentially resulting in an all-win outcome for the platform, the sellers, and the consumers; otherwise, a lower search cost will increase the platform’s optimal fee percentage, potentially leading to higher equilibrium retail prices. Furthermore, the availability of filtering on the platform will in expectation induce consumers to search fewer products but buy products with higher match values, and filtering can either increase or decrease equilibrium retail prices. When filtering reveals only a small amount of the products’ match-value variations, it will benefit the platform, the sellers, and the consumers. This article shows that the effects of filtering and those of a decrease in search cost are qualitatively different.

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Turbine Nozzle Insert Clogging With Seeded Medium Size Particles

Volume 2B: Turbomachinery ◽

10.1115/gt2020-14522 ◽

2020 ◽

Author(s):

Hongzhou Xu ◽

Kevin Liu ◽

Michael Fox

Keyword(s):

Pressure Ratio ◽

Leading Edge ◽

Bimodal Distribution ◽

Solid Particles ◽

Medium Size ◽

Air Filtration ◽

Engine Operation ◽

Coating Layers ◽

Pass Through ◽

Cooling Air

Abstract Gas turbine nozzle cooling often uses inserts to intentionally distribute cool air through impingement holes to hot spots, especially at leading edge regions of stage-1 nozzles. Owing to the variations of engine operation environment, inlet air filtration systems, upstream component surface coating layers, and oil/air sealing material choices, solid particles could enter the engine from outside or be generated inside from rotor rubbing, seal debris, peeled off coating layers or rusty surfaces, etc. These particles and their agglomerates can be carried by airflow to enter nozzle inserts and clog impingement holes, which may reduce cooling air significantly, resulting in severe engine failures. To reduce the risk of insert clogging, particle separation devices and filtration mesh screens have been implemented in front of nozzle inlets to prevent larger particles from entering. Therefore, designing appropriate nozzle insert hole sizes becomes very critical to let smaller particles pass through and exhaust from the nozzle exit. This experimental study focuses on finding a correlation between the impingement hole sizes of a nozzle insert and their clogged areas caused by seeded fine and medium size particles of Fe2O3 under specific pressure ratios. A nozzle insert was first chosen, and a single row of cylindrical impingement holes was machined at the leading edge of the insert. Measurements were conducted in a pressurized vessel at Reynolds numbers from 7,000 to 62,000 and pressure ratios from 1.01 to 1.10. Results indicate that insert clogging is a strong function of the hole size, particle size, and pressure ratio. The tested particles showed a bimodal distribution of fine and medium sizes, and the medium size particles played a major role in clogging holes. A clogging diagram with 3 zones (fully clogged zone, partially clogged zone, and no clogging zone) is generated from the test data, which can provide important design criteria for sizing the insert leading edge impingement holes to reduce the risk of clogging.

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Beliefs and Consumer Search in a Vertical Industry

Journal of the European Economic Association ◽

10.1093/jeea/jvz046 ◽

2019 ◽

Vol 18 (5) ◽

pp. 2359-2393 ◽

Cited By ~ 1

Author(s):

Maarten Janssen ◽

Sandro Shelegia

Keyword(s):

Low Cost ◽

Search Costs ◽

Retail Price ◽

Consumer Search ◽

Common Assumption ◽

Vertical Relations ◽

Retail Prices ◽

The Common ◽

Search Market ◽

Pass Through

Abstract This paper studies vertical relations in a search market. As the wholesale arrangement between a manufacturer and its retailers is typically unobserved by consumers, their beliefs about who is to be blamed for a price deviation play a crucial role in determining wholesale and retail prices. The common assumption in the consumer search literature is that consumers exclusively blame an individual retailer for a price deviation. We show that in the vertical relations context, predictions based on this assumption are not robust in the sense that if consumers hold the upstream manufacturer at least partially responsible for the deviation, equilibrium predictions are qualitatively different. For robust beliefs, the vertical model can explain a variety of observations, such as retail price rigidity (or, alternatively, low cost pass-through), nonmonotonicity of retail prices in search costs, and (seemingly) collusive retail behavior. The model can be used to study a monopoly online platform that sells access to final consumers.

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Online Travel Agency Price Presentation: Examining the Influence of Price Dispersion on Travelers’ Hotel Preference

Journal of Travel Research ◽

10.1177/0047287519857159 ◽

2019 ◽

Vol 59 (4) ◽

pp. 704-721 ◽

Cited By ~ 7

Author(s):

Jungkeun Kim ◽

Drew Franklin ◽

Megan Phillips ◽

Euejung Hwang

Keyword(s):

Consumer Choice ◽

Price Dispersion ◽

Travel Agency ◽

Pricing Strategies ◽

Hotel Room ◽

Online Travel ◽

Online Travel Agency ◽

Price Presentation ◽

The Impact ◽

Regular Price

This research investigates the impact of different degrees of price dispersion on travelers’ hotel choice. More specifically, within an online travel agency (OTA) context, we examine the effect of wide (vs. narrow) price dispersion on hotel preference. In addition, we suggest two boundary conditions for this effect: salience of external regular price and perception of destination uncertainty. Across multiple studies, our results show that travelers prefer a hotel option featuring wide price dominance dispersion. Additionally, both the presence of an external regular price and the level of uncertainty associated with the hotel destination act as moderating influences. This work represents an emerging direction in the online price dispersion literature, namely, exploring the consequences of online price dispersion. In practice, by understanding the influence of price dispersion on consumer choice, OTAs can develop more effective pricing strategies in partnership with their hotel room suppliers.

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