How Increasing Supplier Search Cost Can Increase Welfare

2017 ◽  
Vol 18 (1) ◽  
Author(s):  
Zhiwen Li ◽  
Michael Arnold ◽  
Thierry Penard
Keyword(s):  
Wholesale Price ◽  
Search Costs ◽  
Trading Partner ◽  
Search Model ◽  
Search Cost ◽  
Market Driven ◽  
Simple Search ◽  
Increase Efficiency

AbstractReductions in search costs are generally found to increase efficiency and welfare. Using a simple search model we show that when an upstream firm incurs a search cost to identify a potential trading partner and the two parties then negotiate the wholesale price, a reduction in search cost can actually reduce welfare. Furthermore, in a market driven by seller search, a search cost of zero is never socially optimal.

scholarly journals Searching For Better Prospects: Endogenizing Falling Job Tenure and Private Pension Coverage

2006 ◽  
Vol 6 (1) ◽  
Author(s):  
Leora Friedberg ◽  
Michael T Owyang ◽  
Tara M Sinclair
Keyword(s):  
Job Search ◽  
Search Costs ◽  
Private Pension ◽  
Search Model ◽  
Defined Benefit ◽  
Job Tenure ◽  
Relative Wages ◽  
Pension Coverage ◽  
New Evidence ◽  
General Conditions

Abstract Recent declines in job tenure have coincided with a shift away from traditional defined benefit (DB) pensions, which reward long tenure. New evidence also points to an increase in job-to-job movements by workers, and we document gains in relative wages of job-to-job movers over a similar period. We develop a search model in which firms may offer tenure-based contracts like DB pensions to reduce the incidence of costly on-the-job search by workers. Either reduced search costs or an increase in the probability of job matches can, under fairly general conditions, lower the value of deterring search and the use of DB pensions.

A simple search model with procyclical quits

1989 ◽  
Vol 13 (2) ◽  
pp. 247-253 ◽  
Author(s):  
Steven A. Lippman ◽  
John W. Mamer
Keyword(s):  
Search Model ◽  
Simple Search

scholarly journals A simple search model of money with heterogeneous agents and partial acceptability

2004 ◽  
Vol 24 (4) ◽  
pp. 877-885 ◽  
Author(s):  
Andrei Shevchenko ◽  
Randall Wright
Keyword(s):  
Heterogeneous Agents ◽  
Search Model ◽  
Simple Search

A study on information disclosure, trust, reducing search cost, and online group-buying intention

2016 ◽  
Vol 29 (6) ◽  
pp. 903-918 ◽  
Author(s):  
Shu-Mei Tseng ◽  
Meng-Chieh Lee
Keyword(s):  
Information Disclosure ◽  
Sampling Method ◽  
Search Costs ◽  
Partial Least Square ◽  
Least Square ◽  
Survey Method ◽  
Search Cost ◽  
Content Type ◽  
Group Buying ◽  
Online Group

Purpose More and more disputes have quickly emerged and accumulated, hence generating uncertainties and doubts among consumers regarding the online group-buying. In order to decrease such uncertainties, the purpose of this paper is to explore the relationships among information disclosure, trust, reducing search cost, and online group-buying intention, as well as proposing concrete suggestions for enhancing online group-buying intention. Design/methodology/approach In order to explore the relationships among information disclosure, trust, reducing search cost, and online group-buying intention, the questionnaire and statistical analytical techniques were used. Moreover, as this study was an early attempt to develop a model for information disclosure, trust, reducing search cost, and online group-buying intention, partial least square therefore was appropriately to analyze data. Findings The results showed that the level of information disclosure and trust on a group-buying website have positive influence on reducing search costs, while reducing search costs and trust have positive influences on online group-buying intention. Research limitations/implications This research applied a purposive sampling method and obtained a slightly inadequate number of respondents. Therefore, it is suggested that future research should apply a random sampling method to collect more responses and increase the generalizability of the findings. Practical implications By more actively disclosing information it is possible for group-buying websites to increase consumer trust and decrease search costs, thus enhancing their group-buying intentions. Originality/value There are few studies on the relationships among reducing search cost, trust, and group-buying intention from the perspective of information disclosure. This study thus applies a questionnaire survey method to explore the relationships among them. This study also offers concrete suggestions to enhance group-buying intentions, and provides marketing strategies that can be used by online group-buying websites to raise their sales.

scholarly journals Optimal Switching Strategy between Admission Control and Pricing Control Policies with Two Types of Customers and Search Costs

2015 ◽  
Vol 2015 ◽  
pp. 1-9 ◽  
Author(s):  
Jae-Dong Son
Keyword(s):  
Admission Control ◽  
Queueing System ◽  
Search Costs ◽  
Optimal Switching ◽  
Search Cost ◽  
Control Policies ◽  
Switching Strategy ◽  
Net Profit ◽  
Search Option ◽  
Pricing Control

This paper presents a switching strategy between the admission control and the pricing control policies in a queueing system with two types of customers. For an arriving first-type customer, the decision maker has an option on which policy to choose between the two control policies; that is, one determines whether or not to admit the customer’s request for the service (admission control) or decides a price of the customer’s request and offers it to the customer (pricing control). The second-type customers are only served when no first-type customers are present in the system in order to prevent the system from being idle. This would yield an extra income, which we refer to as the sideline profit. The so-called search cost, which is a cost paid to search for customers, creates the search option on whether to continue the search or not. We clarify the properties of the optimal switching strategy as well as the optimal search policy in relation to the sideline profit in order to maximize the total expected net profit. In particular, we show that when the sideline profit is sufficiently large, the two optimal switching thresholds exist with respect to the number of first-type customers in the system.

When Two Rights Make a Wrong: Searching Too Much in Ordered Environments

2005 ◽  
Vol 42 (3) ◽  
pp. 313-322 ◽  
Author(s):  
Kristin Diehl
Keyword(s):  
Utility Function ◽  
Search Costs ◽  
Effect Study ◽  
Screening Tools ◽  
Consideration Sets ◽  
Search Cost ◽  
Average Quality ◽  
Environment Study ◽  
Electronic Shopping

In electronic shopping, screening tools are used to sort through many options, assess their fit with a consumer's utility function, and recommend options in a list ordered from predicted best to worst. When the most promising options are at the beginning of the list, even seemingly advantageous factors (e.g., lower search cost, greater selection) that prompt consideration of more options degrade choice quality by (1) lowering the average quality of considered options and (2) lowering customers' selectivity in focusing attention on the more mediocre rather than the better options from the actively considered set. Study 1 shows that lowering search costs diminishes choice quality in an ordered environment. Study 2 shows that presenting consumers with the top 50 rather than the top 15 recommendations has the same effect. Study 3 shows that greater accuracy motivation in combination with lower search cost diminishes choice quality because consumers are encouraged to consider a wider range of options (lower-quality consideration sets), which ultimately leads to worse choices.

A new continuous-time search model

1991 ◽  
Vol 28 (04) ◽  
pp. 771-778 ◽  
Author(s):  
Wolfgang Stadje
Keyword(s):  
Continuous Time ◽  
Arrival Time ◽  
Stopping Time ◽  
Search Costs ◽  
Time Dependent ◽  
Search Process ◽  
Search Model ◽  
Arrival Times ◽  
Cost Rate ◽  
Over Time

We study a search model in which offers of random size are received randomly over time. The arrival times form a point process of a certain type, and the offer size distribution may depend on the corresponding arrival time. The search costs have a time-dependent cost rate. The objective is to stop the search process such that the expected discounted net reward (associated with the maximal offer received so far) is maximized. A stopping time σ is suggested, and conditions are specified under which σ turns out to be optimal.

scholarly journals Evidence on search costs under hyperinflation in Brazil: The effect of Plano Real

2020 ◽  
Vol 40 (1) ◽  
pp. 75
Author(s):  
Julia P. Araujo ◽  
Mauro Rodrigues
Keyword(s):  
Consumer Price Index ◽  
Search Costs ◽  
Price Setting ◽  
Search Frictions ◽  
Search Cost ◽  
Order Stochastic Dominance ◽  
Cost Distribution ◽  
The Impact ◽  
The City ◽  
Price Quotes

<p>Plano Real put an end to hyperinflation in 1994 and significantly altered price-setting behavior in Brazil. This paper investigates the impact of Plano Real on search frictions. We estimate a nonsequential search model for homogeneous goods to structurally retrieve consumers' search costs. The dataset comprises 11,673 store-level price quotes collected from 1993 to 1995 by FIPE to calculate the Consumer Price Index (CPI) in the city of São Paulo. The strategy consists of using Plano Real as a structural breakpoint in the data. We estimate the model splitting the data into before (Jan-93 to Jun-94) and after (Aug-94 to Dec-95) the plan, and we find evidence on first-order stochastic dominance of the search-cost distribution of the former into the latter; that is, search costs are higher during hyperinflation. The majority of consumers search only once or twice before buying an item, but this share is marginally higher during hyperinflation (84% vs 79%). In addition, after Plano Real, a larger share of consumers are willing to quote prices in all stores before committing to a purchase. We also document evidence of the effect of the plan on shrinking price-cost margins. When searching is less costly, stores lose market power.</p>

scholarly journals Supply Chain Performance with Target-Oriented Firms

2021 ◽  
Author(s):  
Lucy Gongtao Chen ◽  
Qinshen Tang
Keyword(s):  
Supply Chain ◽  
Wholesale Price ◽  
Strong Support ◽  
Problem Definition ◽  
Expected Profit ◽  
Trading Partner ◽  
Supply Chain Performance ◽  
Decentralized System ◽  
Outside Option ◽  
Risk Neutral

Problem definition: We study a supply chain in which a supplier sets the wholesale price and a retailer responds with an order quantity. Both of the two firms can be either risk-neutral—maximizing the expected profit—or target-oriented, which is to maximize her or his ability to reach a target profit. Academic/practical relevance: Our work not only sheds light on the benefit/loss of trading with target-oriented decision makers but also, adds new knowledge to the supply chain coordination literature. Methodology: We provide strong support for firms’ target-based preference and the linear target formation model through a survey as well as analyzing company data. With the firms’ target-oriented behavior evaluated by a CVaR-satisficing measure, we apply a game theoretical framework to investigate how the target-based preference affects supply chain performance. Results: A firm, be it a supplier or a retailer, is always hurt by its target-based preference but can benefit from its trading partner’s target-based preference. A risk-neutral supplier, for example, can sometimes reap the whole supply chain’s profit if the retailer is target-oriented, and a target-oriented supplier always performs better with a target-oriented retailer than a risk-neutral one. Furthermore, a target-oriented retailer and/or supplier can help alleviate the double-marginalization effect and with a specific target, can help the supply chain achieve the same efficiency level as in a risk-neutral centralized system, with just a wholesale price contract. Another important finding is that if both firms are target-oriented, then the supply chain can have a higher expected profit under a decentralized system than a centralized one. This contrasts with the case when both firms are risk-neutral. We also investigate the role of outside option and retailer-type misidentification and find that both can alleviate the retailer’s disadvantage of being target-oriented. Managerial implications: (i) The target-based preference can be exploited by the trading partner, and hence, a firm should adopt the target-oriented decision criterion with caution. (ii) A target-oriented retailer can explore strategies such as revealing his outside option or hiding his target-based preference in order to be less manipulated. (iii) Whether a firm (and the supply chain) can benefit from its trading partner’s target-based preference often depends on how ambitious the trading partner (and the firm itself if it is target-oriented) sets the target. (iv) Target-based preference of one or both firms can help the supply chain reach the first-best efficiency. (v) When both firms are target-oriented, decentralization can be preferred to centralization.

Job to Job Movements in a Simple Search Model

2010 ◽  
Vol 100 (2) ◽  
pp. 343-374 ◽  
Author(s):  
Pietro Garibaldi ◽  
Espen R Moen
Keyword(s):  
Search Model ◽  
Simple Search
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