| his thesis consists of three essays. Chapter 1 studies Low Price Guarantees, a price policy employed in a variety of markets, such as tires, consumer electronics, books, sporting goods, power tools and even flights and hotels. A Low Price Guarantees (LPG) is a promise made by a firm that it will reimburse the consumer if he finds a lower price elsewhere. I examine how this policy affects consumers by introducing a model that encompasses general alternative explanations of LPGs. Under the proposed model, whether LPGs harm or benefit consumers depends on the market's characteristics. I propose a structural model to estimate the parameters of the market, using price data alone. I then use those estimates to construct counterfactual prices and measure the effect of LPGs on consumer surplus. I examine a rich and novel dataset on the tire market and I find that LPGs hurt consumers. If this policy was not allowed, prices would decrease by between four to ten percent. Moreover, LPGs have the largest effect on price-sensitive consumers, who tend to be the poorest.;In Chapter 2, I analyze how the incentives for firms to obfuscate consumers vary with their brand awareness. I study a model under which consumers have limited time to search. Each firm chooses a price and an obfuscation level, which represents the amount of time a consumer has to spend in order to learn the firm's price. Consumers search stores sequentially, and the search order is determined by the firms' brand awareness. Consumers keep searching down the list until they run out of time. At that point, they purchase from the store with the lowest price, among the ones they visited. When a firm obfuscates, it prevents some consumers from learning its price. Those consumers will only learn prices from firms that are higher on the search order. This gives those firms some market power, which leads them to set higher prices. The obfuscating firm benefits from that, since it can also list a higher price. I find that, in equilibrium, the higher the ranking of the store, the more it will obfuscate and the higher its price. Using a novel dataset on Internet Service providers from Canada, I find empirical support for the predictions of the model. I measure obfuscation using observable criteria on firms' pricing schemes. I measure firms' brand awareness by the number of Google searches in the recent past. I find positive correlation between the firms' level of brand awareness and both their obfuscation level and price.;In Chapter 3, I propose a new explanation for the gap between willingness to accept (WTA) and willingness to pay (WTP), that relies on two assumptions: i) decision makers do not know their valuation for a good, but can learn it if they incur cognitive costs; ii) decision makers have minimax regret preferences. In rough terms, if a minimax regret decision maker does not know her precise valuation for a mug, but knows that it lies somewhere between... |
