Abstract
This paper examines consumers search behavior in the market for 3D enabled high definition televisions (3D HDTV). Utilizing Wildenbeest (2011)’s methodology, I study price dispersion in a vertically differentiated market and individually identify the effects of search friction and product differentiation on price. I estimate that 62.9% of the price variation in this market is explained by search friction with the rest being attributable to vertical differentiation. Further, I find that the search intensity in this market is relatively low; I estimate that 67% of consumers only search one store while just 8% of consumers search all the stores. In the 3D HDTV market search frictions are relatively more important than vertical differentiation in explaining the degree of price dispersion.
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