Price Competition Under Limited Comparability

Abstract

This article studies market competition when firms can influence consumers' ability to compare market alternatives through their choice of price “formats.” In our model, the ability of a consumer to make a comparison depends on the firms' format choices. Our main results concern the interaction between firms' equilibrium price and format decisions and its implications for industry profits and consumer switching rates. In particular, market forces drive down the firms' profits to a “constrained competitive” benchmark if and only if the comparability structure satisfies a property that we interpret as a form of “frame neutrality.” The same property is necessary for equilibrium behavior to display statistical independence between price and format decisions. We also show that narrow regulatory interventions that aim to facilitate comparisons may have an anticompetitive effect.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 180 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.