Raising search costs to deter window shopping can increase profits and welfare
Consumers tend to browse products they are interested in and firms often invest resources in selling to them. A consequence, I show, is that it is optimal for a firm to increase the cost of browsing (even though this drives away potential customers) because doing so allows it to target sales efforts...
| Main Author: | |
|---|---|
| Format: | Journal article |
| Language: | English |
| Published: |
Wiley
2017
|
| _version_ | 1826307176123072512 |
|---|---|
| author | Taylor, G |
| author_facet | Taylor, G |
| author_sort | Taylor, G |
| collection | OXFORD |
| description | Consumers tend to browse products they are interested in and firms often invest resources in selling to them. A consequence, I show, is that it is optimal for a firm to increase the cost of browsing (even though this drives away potential customers) because doing so allows it to target sales efforts at those consumers most likely to buy. Despite representing pure waste, this can increase welfare by facilitating efficient allocation of sales or marketing resources. For a similar reason, consumers often benefit from search costs in aggregate, and prefer them to other means of screening, such as price increases. |
| first_indexed | 2024-03-07T06:59:00Z |
| format | Journal article |
| id | oxford-uuid:ff18febb-5874-412c-b2b7-aa8ec5b579bb |
| institution | University of Oxford |
| language | English |
| last_indexed | 2024-03-07T06:59:00Z |
| publishDate | 2017 |
| publisher | Wiley |
| record_format | dspace |
| spelling | oxford-uuid:ff18febb-5874-412c-b2b7-aa8ec5b579bb2022-03-27T13:41:56ZRaising search costs to deter window shopping can increase profits and welfareJournal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:ff18febb-5874-412c-b2b7-aa8ec5b579bbEnglishSymplectic Elements at OxfordWiley2017Taylor, GConsumers tend to browse products they are interested in and firms often invest resources in selling to them. A consequence, I show, is that it is optimal for a firm to increase the cost of browsing (even though this drives away potential customers) because doing so allows it to target sales efforts at those consumers most likely to buy. Despite representing pure waste, this can increase welfare by facilitating efficient allocation of sales or marketing resources. For a similar reason, consumers often benefit from search costs in aggregate, and prefer them to other means of screening, such as price increases. |
| spellingShingle | Taylor, G Raising search costs to deter window shopping can increase profits and welfare |
| title | Raising search costs to deter window shopping can increase profits and welfare |
| title_full | Raising search costs to deter window shopping can increase profits and welfare |
| title_fullStr | Raising search costs to deter window shopping can increase profits and welfare |
| title_full_unstemmed | Raising search costs to deter window shopping can increase profits and welfare |
| title_short | Raising search costs to deter window shopping can increase profits and welfare |
| title_sort | raising search costs to deter window shopping can increase profits and welfare |
| work_keys_str_mv | AT taylorg raisingsearchcoststodeterwindowshoppingcanincreaseprofitsandwelfare |