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Using price distributions to estimate search costs

Hong, Han and Shum, Matthew (2006) Using price distributions to estimate search costs. RAND Journal of Economics, 37 (2). pp. 257-275. ISSN 0741-6261. https://resolver.caltech.edu/CaltechAUTHORS:HONrje06

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Abstract

We show how the equilibrium restrictions implied by standard search models can be used to estimate search-cost distributions using price data alone. We consider both sequential and nonsequential search strategies, and develop estimation methodologies that exploit equilibrium restrictions to recover estimates of search-cost heterogeneity that are theoretically consistent with the search models.We illustrate the method using online prices for several economics and statistics textbooks.


Item Type:Article
Related URLs:
URLURL TypeDescription
http://dx.doi.org/10.1111/j.1756-2171.2006.tb00015.xDOIArticle
ORCID:
AuthorORCID
Shum, Matthew0000-0002-6262-915X
Additional Information:© RAND 2006. We thank the Editor, Rob Porter, and two anonymous referees for their extensive and valuable suggestions. We also thank Austan Goolsbee, Joe Harrington, Sridhar Moorthy, Geert Ridder, Seth Sanders, Randal Watson, and seminar participants at Johns Hopkins, Toronto, the 2002 SITE meetings at Stanford University, the 2002 Winter Econometric Society Meetings in Atlanta, and the 2002 Society of Economic Dynamics Meetings in New York for helpful comments. Matthew Langley and Wei Tan provided excellent research assistance. We gratefully acknowledge support from the NSF (grant nos. SES-0335331, SES-0003352).
Funders:
Funding AgencyGrant Number
NSFSES-0335331
NSFSES-0003352
Subject Keywords:INFORMATION; COMPETITION; LIKELIHOOD; INDUSTRY; MODEL; INTERNET; MARKETS
Issue or Number:2
Record Number:CaltechAUTHORS:HONrje06
Persistent URL:https://resolver.caltech.edu/CaltechAUTHORS:HONrje06
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:12200
Collection:CaltechAUTHORS
Deposited By: Lindsay Cleary
Deposited On:29 Oct 2008 02:40
Last Modified:03 Oct 2019 00:26

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