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Maximum Likelihood Estimation of Search Costs
2006
Social Science Research Network
In a recent paper Hong and Shum (2006) present a structural method to estimate search cost distributions. We extend their approach to the case of oligopoly and present a new maximum likelihood method to estimate search costs. We apply our method to a data set of online prices for different computer memory chips. The estimates suggest that the consumer population can be roughly split into two groups which either have quite high or quite low search costs. Search frictions confer a significant
doi:10.2139/ssrn.885260
fatcat:ltlhg64ctzey3awrrveqqgfdhm