A consumer's decision to engage in search depends on the beliefs the consumer has about an unknown product characteristic such as price. Given beliefs are rarely observed, researchers typically assume that consumers have rational expectations or update beliefs consistent with Bayesian updating....

Price data on exports to Brazil from countries excluded from MERCOSUR show that preferential trading agreements hurt nonmember countries by compelling them to reduce their prices to meet competition from suppliers within the regional trading bloc.The welfare effects of preferential trading...