Gasoline taxes can correct externalities associated with automobile use, reduce dependency on foreign oil, and raise government revenue. Our understanding of the optimal gasoline tax and the efficacy of existing taxes is largely based on empirical analysis of consumer responses to gasoline price changes. In this paper, we directly examine how gasoline taxes affect consumer behavior as distinct ...

An important role of informative advertising is to inform consumers of the simple fact that the shop that advertises sells a particular product. This information may help consumers to save on their search activities: instead of wandering around, a consumer can simply visit the shop that has advertised, knowing that there he can find the commodity he is looking for. The implications of this simp...

This paper develops a new search model to explain the long tail e¤ect. Search targetibility or the quality of search is explicitly modeled. Consumers are searching for right products within right categories. Mainstream consumers are distinguished from long tail consumers in terms of the prevalence of consumer tastes in the population. We show that mainstream consumers enjoy higher utility and m...

We consider a market in which …rms can partially observe each consumer’s search behavior in the market. In our main model, a …rm knows whether a consumer is visiting it for the …rst time or whether she is returning after a previous visit. Firms have an incentive to o¤er a lower price on a …rst visit than a return visit, so that new consumers are o¤ered a “buy-now”discount. The ability to o¤er s...

The ‘financial accelerator’ model when applied to households states that shocks to household balance sheets (primarily changes in house prices) amplify fluctuations in consumer spending by tightening or relaxing collateral constraints on borrowing. We construct an alternative model where households also have access to unsecured debt, and examine the effect of shocks to house prices on debt-fina...

Utilizing the Consumer Expenditure Survey and state-level variation in taxes, this study nds that prices for most models of new cars shift by more than the amount of a sales tax. The evidence of an overshifting of prices o ers support for the recent models of tax incidence in imperfectly competitive markets. The results also suggest that changes in the after-tax interest rate have o setting e e...

We show that the search method consumers use when resolving uncertainty in the prices of alternatives is identified in data where consumers’ consideration sets (but not sequence of searches), prices for the considered alternatives and market-wide price distributions are observed. The search method is non-parametrically identified by different patterns of actual prices in consumers’ consideratio...