Search and Obfuscation in a Technologically Changing Retail Environment: Some Thoughts on Implications and Policy
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Technologies, especially the Internet, have transformed how consumers search for products and prices. Price search has become cheap and easy and, therefore, ubiquitous, for many products. Just as technologies have made price search easier, however, they have increased incentives that firms have to obfuscate, or make price search harder. In this article, we focus on these actions that firms take and their effects on market participants. We discuss empirical evidence on this phenomenon, as well as its welfare impacts in the context of theories of search and obfuscation. Finally, we offer a framework for thinking about policy interventions based on this welfare analysis and outline some of the challenges facing policymakers.
I have received no outside financial support for this research, other than an honorarium from the NBER. I have no relevant or material financial relationships, either.