Recent consumer research suggests that lowering search costs for quality information reduces consumer price sensitivity … that lowering quality search costs by smart agents can have the opposite effect on differentiation and price sensitivity … preferences. In this research, we ask and answer the following questions: In markets in which price and quality are uncorrelated …

constructed to thwart comparison shopping and to ward off price competition, dimming the appeal of many initial electronic … shopping services. Ceteris paribus, if electronic shopping lowers the cost of acquiring price information, it should increase … price sensitivity, just as is the case for price advertising. In a similar vein, though, electronic shopping can lower the …

unique equilibrium, which is separating. Higher-quality sellers post higher prices, so price signals quality. The arrival … higher continuation values. For some parameter values, higher-quality sellers post the full-information price; for other … values these sellers have to post a higher price to keep lower-quality sellers from mimicking them. In an extension, we show …