Consumer Search with Price Sorting∗

This paper introduces price sorting into a consumer search model. Either ascending or descending price sorting can be applied before the sampling process. Consumers search sequentially for products with two types of qualities. We allow a fraction of consumers to have zero search costs, and all other consumers have the same positive search cost. Price dispersion exists in the unique symmetric equilibrium. We find that, when the search cost is small, using price sorting will improve both total welfare and consumer surplus, but have no impact on industry profits. Moreover, if consumers can choose the type of price sorting for their own interests, ascending price sorting (or descending price sorting, respectively) will be chosen if there are more high-quality products (or low-quality products, respectively) in the market.