Byrne, David P. and Roos, Nicolas De creator text American Economic Journal: Microeconomics monographic eng

print

14(2), May, 2022: p.81-112 Workhorse economic models used for studying the market impacts of search frictions assume constant search costs: individuals pay the same cost to obtain price information each time they search. This paper provides evidence on a new form of search costs: start-up costs. Exploiting a natural experiment in retail gasoline, we document how a temporary, large exogenous shock to consumers' search incentives leads to a substantial, permanent increase in price search. A standard search model fails to explain such history dependence in search, while it follows directly from a model with a one-time up-front cost to start searching. – Reproduced Start-up American Economic Journal: Microeconomics 221226