Market Frictions: A Unified Model of Search and Switching Costs

  title={Market Frictions: A Unified Model of Search and Switching Costs},
  author={C. Wilson},
  journal={Microeconomics: Welfare Economics & Collective Decision-Making eJournal},
  • C. Wilson
  • Published 2009
  • Economics
  • Microeconomics: Welfare Economics & Collective Decision-Making eJournal
  • Despite the existence of two vast literatures, very little is known about the potential differences or interactions between search and switching costs. This paper demonstrates the benefits of examining the two frictions in unison. First, the paper shows how subtle distinctions between the two costs can provide important differences in their effects upon consumer behaviour and market prices. In many cases, policymakers may prefer to reduce search costs rather than switching costs. Second, the… CONTINUE READING
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