Abstract：This article considers costly sequential search in an online-shopping platform in which either ascending or descending price sorting can be applied prior to the search process. Our model generates price dispersion in the unique symmetric equilibrium for each type of price sorting. Moreover, we show that consumers choose ascending/descending price sorting when the proportion of high-quality firms is high/low. Finally, when search costs are small, the availability of price sorting improves consumer surplus but has no impact on industry profit.

Key Words: Consumer search; Product differentiation; Sorting; Search accuracy; Price dispersion.

http://www.aeconf.com/Articles/Nov2024/aef250201.pdf