A Search Model of Experience Goods

Résumé

The economic literature on consumer search has focused on inspection goods, the quality of which is known before purchase. This paper analyzes a search model of experience goods, where heterogeneous firms can invest to improve product quality, whereas consumers search for better prices and match values but can discover quality only after consumption. We find that, as search cost increases, both consumer surplus and welfare initially increase, although they eventually decrease; and market provision of quality is socially deficient when search cost is low but possibly excessive when it is high. We further show how a search platform may increase or decrease welfare. Yongmin Chen and Tianle Zhang.