Research & Publications

Journal Articles

Semi-nonparametric Estimation of Consumer Search Costs

2012, forthcoming Journal of Applied Econometrics

José Luis Moraga-González, Zsolt Sándor, Matthijs R. Wildenbeest

Abstract

This paper studies the estimation of the distribution of non-sequential search costs. We show that the search cost distribution is identified by combining data from multiple markets with common search technology but varying consumer valuations, firms' costs, and numbers of competitors. To exploit such data optimally, we provide a new method based on semi-nonparametric (SNP) estimation. We apply our method to a dataset of online prices for memory chips and find that the search cost density is essentially bimodal such that a large fraction of consumers searches very little, whereas a smaller fraction searches a relatively large number of stores.

Citation

Moraga-González, José Luis, Zsolt Sándor, and Matthijs R. Wildenbeest (2012), "Semi-nonparametric Estimation of Consumer Search Costs." Forthcoming in the Journal of Applied Econometrics.

Keywords

consumer search, oligopoly, search costs, semi-nonparametric estimation