Technological Advances, Consumer Transaction Costs, and Consumer Welfare
نویسنده
چکیده
Consumers incur many transaction costs in purchasing and using most products. This paper examines the effects of a reduction in such consumer transaction costs caused by market-level technological advances. Using a model in which consumers are simultaneously heterogenous in their transaction costs and in their marginal valuation of product quality, we highlight two mechanisms that can cause such reductions in consumer transaction costs to lower consumer surplus and reduce consumer share of the total social surplus. We also show that when a seller can invest to reduce consumer transaction costs, consumers may be better off with higher transaction costs. Finally, the paper shows how such reductions in consumer transaction costs can either lower or raise consumer prices. (
منابع مشابه
The Heterogeneous Geographic and Socioeconomic Incidence of Cigarette Taxes: Evidence from Nielsen Homescan Data
This paper uses Nielsen Homescan data at the Universal Product Code-transaction level to identify how cigarette taxes are passed through to consumer prices in order to determine how the supply and demand-side split the excess burden of taxation. We find that these excise taxes are less than fully passed through to consumer prices. Using information on consumer location and the location of purch...
متن کاملDoes Consumer Search Matter in Retail Trade?
This study investigates the relationship between consumer search costs, inflation, and firm markups in retail trade by employing actual measures of consumer search cost gathered by way of an online consumer survey. Consistent with theory, results indicate that markups can be higher if consumer search costs are higher. Results from panel data also show that increases in inflation lead to increas...
متن کاملDifferential Pricing When Costs Differ: A Welfare Analysis∗
This paper analyzes the welfare effects of monopoly differential pricing in the important but largely neglected case where costs of service differ across consumer groups. Cost-based differential pricing is shown to increase total welfare and consumer welfare relative to uniform pricing for broad classes of demand functions, even though total output can still fall or the output allocation betwee...
متن کاملEthical Consumer Movement: Consumer Ethical Concerns and Behaviors
Background: Consumer ethical behavior has attracted much attention in recent years. However, most empirical research has focused on specific instances of ethical consumer behavior and ignored other ethical behaviors. This means a complete lack of understanding of the lifestyles of ethical consumers. In this article, while referring to the formation of ethical consumption, a full range of ethica...
متن کاملRegional restriction , strategic delegation , and welfare
We investigate the effects of restricting locations of firms into Hotelling duopoly models. In the standard location-price models, the equilibrium distance between firms is too large from the viewpoint of consumer welfare. Thus, restricting locations of firms and reducing the distance between firms improve consumer welfare, through lower prices and smaller transportation costs for consumers. We...
متن کامل