Does product complexity matter for competition in experimental retail markets? |
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Authors: | Stefania Sitzia Daniel John Zizzo |
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Institution: | (1) School of Economics, University of East Anglia, Norwich, UK;(2) School of Economics and ESRC Centre for Competition Policy, School of Economics, University of East Anglia, Norwich, UK |
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Abstract: | We describe a first experiment on whether product complexity affects competition and consumers in retail markets. We are unable
to detect a significant effect of product complexity on prices, except insofar as the demand elasticity for complex products
is higher. However, there is qualified evidence that complex products have the potential to induce consumers to buy more than
they would otherwise. In this sense, consumer exploitability in quantities cannot be ruled out. We also find evidence for
shaping effects: consumers’ preferences are shaped by past experience with prices, and firms may in principle exploit this
to sell more. |
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Keywords: | |
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