Escaping search when buying

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This paper studies a duopoly with horizontally differentiated products and costly sequential consumer search. Prices are posted and search costs must be paid to observe the match values of goods. Consumers choose both in what order to inspect the products and whether to inspect the goods before purchasing. When the expected match value is relatively high, consumers always consider the cheaper product first. However if the expected match value is low, then consumers may check the more expensive product first. The fact that a consumer may buy a product without inspection softens price competition. As a result, the comparative statics of prices and surplus division with respect to search costs is different from that of a sequential search model with observable prices.