We set up a game-theoretic model to examine the oligopolistic price competition, considering two features of online search: the existence of a common search ordering and shoppers who have non-positive search cost. We find that in equilibrium firms set their prices probabilistically rather than...

The identical agent, identical good Bertrand game is associated with prices at marginal cost - the Bertrand Paradox. If consumers make occasional mistakes I show that the standard Bertrand game gives rise to positive profits and prices above marginal cost. Some firms charge low prices to capture...