Search in second Hand market : The case of mobile phone

[EN] In this paper, I analyzed the search behavior of used mobile phone sellers and buyers in online trading platform by using sequential search model. The identification of search is achieved by variations in the duration and posted prices. I find that sellers face different selling costs which are mainly induced by the competition in the market. When competition level among the sellers is high, the more price dispersion is observed. It is consistent with the literature that studied positive relationship between the number of sellers and price dispersion. In equilibrium, consumers have higher search costs for the less competitive brand.Baik, Y. (2020). Search in second Hand market : The case of mobile phone. Editorial Universitat Politècnica de València. 342-342. http://hdl.handle.net/10251/148775OCS34234

Essays in household finance

In the first chapter, I exploit the rebranding of a mortgage lender, under a more salient name and in some Italian provinces, to empirically analyze households’ choice behaviour in response to brand popularity. Loan-level data on both the universe of newly originated mortgages and the offer rates suggest that (1) brand awareness reduces the equilibrium price of residential mortgage contracts and (2) the reduction mainly reflects consumers’ selection into cheaper products. Comparing contracted rates with concurrent market offers from the main online mortgage broker in Italy, I show that households’ reallocation towards less expensive choices is unlikely to reflect pure substitution behaviours induced by brand persuasion. In fact, my findings support the informative view that brand awareness improves consumers’ search and allows them to obtain more convenient deals, with an overall decrease in price dispersion. In the second chapter, we back empirical findings with theoretical foundations, and quantify the impact of brand name on consumers’ search costs and borrowers’ transition across lenders within a life-cycle model. The model is well calibrated to replicate main features of the Italian household sector and to match the level of dispersion in the price of mortgage products encountered in the data. Model calibrations imply a 330 euro reduction in consumers’ search costs due to brand popularity, and roughly a 10 percentage points increase in the share of households that move to cheaper lenders. The treatment effect of brand name on price dispersion is in line with the empirical evidence in chapter one. In the third chapter, we use information on mortgage supply available from the online broker to assess trends in lending strategies of Italian banks. We document that (1) riskier mortgages (high loan-to-value, low borrower’s income, and long maturity) are offered by fewer banks that charge higher rates; (2) keeping the level of risk constant, online banks offer better price conditions than traditional ones. We then use online offer rates to nowcast bank-level official rates (MIR). By relying on both regression analysis and machine learning algorithms (random forest), we show that online prices have a high predictive content for the equilibrium price of fixed-rate mortgages, and allow for a very timely assessment of changes in household financing conditions

Inflation, price competition and consumer search technology

This paper studies an (S, s) pricing model from the perspective of inflation and price competition in search markets. I present a model in which consumers'search technologies can influence firms' price setting, price dispersion, and the market structure. The result shows that although price competition among firms is more intensified in markets where consumers' search technologies are more efficient, price inflation is counter-intuitively, more likely to increase monopoly power of firms and to stimulate entry in these markets. The model also provides new empirical implications for firms' price setting behaviors

Online Price Dispersion Within and Between Seven European Countries

This paper provides a comprehensive analysis of online price dispersion in Europe, across a broad range of product categories and countries. Using the dominant European price comparison site we collected firm specific prices, weekly, from sevcn European countries (Denmark, France, Italy, Netherlands, Spain, Sweden and the United Kingdom) for 31 unique products, falling into five distinct product categories (printers, PDAs, scanners, games consoles, computer games and music), over the nine month period October 2001 to June 2002. The resulting data set comprises over 17,000 individual price observations. Using a number of alternative measures of price dispersion we find significant differences in the degree of price dispersion observed in online markets, both between countries and across product categories. We consider alternative explanations for online price dispersion and analyse their significance in explaining the observed differences

Information, Search, and Price Dispersion

We provide a unified treatment of alternative models of information acquisition/transmission that have been advanced to rationalize price dispersion in online and offline markets for homogeneous products. These different frameworks -- which include sequential search, fixed sample search, and clearinghouse models -- reveal that reductions in (or the elimination of) consumer search costs need not reduce (or eliminate) price dispersion. Our treatment highlights a "duality" between search-theoretic and clearinghouse models of dispersion, and shows how auction-theoretic tools may be used to simplify (and even generalize) existing theoretical results. We conclude with an overview of the burgeoning empirical literature. The empirical evidence suggests that price dispersion in both online and offline markets is sizeable, pervasive, and persistent and does not purely stem from subtle differences in firms' products or services.

Segmented switchers and retailer pricing strategies

Empirical studies reveal a surprisingly wide variety of price promotion strategies among retailers, even among Internet sellers of undifferentiated homogenous goods such as books and music CD’s. Several empirical findings remain puzzling, particularly that within the same market some small retailers decide to deeply discount, while other small retailers forgo the price-sensitive switchers and price high to play their niche. We present theoretical and empirical analyses that address these varied pricing strategies. Our model of three asymmetric firms shows that under multiple switcher segments, where different switchers compare prices at different retailers, firm-specific loyalty is not sufficient to explain the variety of retailer pricing strategies. We demonstrate that a retailer’s pricing strategy is driven by the ratio of the size of switcher segments for which the retailer competes to its loyal segment size. The relative switcher-to-loyal ratios among retailers explain when a firm is more or less inclined to discount deeply or frequently. We thereby identify when a small firm finds it optimal to play the niche and price high, despite having few loyals, or to discount and go for the switchers. Our analysis reveals several interesting findings, such as a small firm that benefits from strategically limiting its access to switchers. The results of two empirical studies confirm our model’s predictions for varied retailer pricing strategies in the context of Internet booksellers

Price competition with consumer confusion

Copyright © 2013, INFORMS. Article posted with permission.This paper proposes a model in which identical sellers of a homogeneous product compete in both prices and price frames (i.e., ways to present price information). Frame choices affect the comparability of price offers and may cause consumer confusion and lower price sensitivity. In equilibrium, firms randomize their frame choices to obfuscate price comparisons and sustain positive profits. The nature of the equilibrium depends on whether frame differentiation or frame complexity is more confusing. Moreover, an increase in the number of competitors induces firms to rely more on frame complexity, and this may boost industry profits and lower consumer surplus

Inflation, Price Competition and Consumer Search Technology

This paper studies an (S, s) pricing model from the perspective of inflation and price competition in search markets. I present a model in which consumers'search technologies can influence firms' price setting, price dispersion, and the market structure. The result shows that although price competition among firms is more intensified in markets where consumers' search technologies are more efficient, price inflation is counter-intuitively, more likely to increase monopoly power of firms and to stimulate entry in these markets. The model also provides new empirical implications for firms' price setting behaviors.

Brand and Price Advertising in Online Markets

We model a homogeneous product environment where identical e-retailers endogenously engage in both brand advertising (to create loyal customers) and price advertising (to attract "shoppers"). Our analysis allows for "cross-channel" effects; indeed, we show that price advertising is a substitute for brand advertising. In contrast to models where loyalty is exogenous, these cross-channel effects lead to a continuum of symmetric equilibria; however, the set of equilibria converges to a unique equilibrium as the number of potential e-retailers grows arbitrarily large. Price dispersion is a key feature of all of these equilibria, including the limit equilibrium. While each firm finds it optimal to advertise its brand in an attempt to "grow" its base of loyal customers, in equilibrium, branding (1) reduces firm profits, (2) increases prices paid by loyals and shoppers, and (3) adversely affects gatekeepers operating price comparison sites. Branding also tightens the range of prices and reduces the value of the price information provided by a comparison site. Using data from a price comparison site, we test several predictions of the model.Price dispersion