Bachelor Thesis
Bachelor Thesis in Hungarian
Bachelor’s Degree Abstract
In the presence of asymmetrical information, consumers by searching for lower prices for the very same homogeneous good might find cheaper suppliers hence they can save money. On the other hand, by searching consumers not only will save money but due to the opportunity costs of search, they will lose some money as well, hence search is costly. In my thesis I present the two main kinds of search models, a sequential and a non-sequential one. In order to quantify consumers’ search costs, based on the non-sequential search model I carry out an empirical analysis by analyzing the prices of four consumer goods. My first hypothesis is that, if the relative price dispersion of two goods is roughly equal and the average price of one good is higher, then the consumers of the more expensive good will have higher search costs. This hypothesis was proved to be true. My second hypothesis is that (with the same setting as with the first hypothesis), the ratio of consumers (of the more expensive good) who only compare three prices will be higher, relative to the cheaper good. My second hypothesis was proved to be false. My third hypothesis is that, if the average prices of two goods roughly equal and one of the goods has higher price dispersion, then the good with the higher price dispersion results in higher cost savings. My third hypothesis was proved to be true. My fourth hypothesis is that (with the same setting as with the third hypothesis), the consumers (of the good with greater price dispersion) who only compare the prices of three goods will be fewer. The fourth hypothesis was proved to be false.