Search, Information, and Prices

Consider a market with identical firms offering homogeneous good. For any given ex ante distribution of the price count (the number from which consumer obtains quote), we derive tight upper bound on equilibrium sales prices. The holds across all models firms’ common-prior higher-order beliefs about count, including extreme cases full information and no information. One implication our results is that small probability equal to one can lead large increase in expected price. also applies class where endogenously determined.