Competitive Comparison-Shopping Mediated Markets

This paper considers markets mediated by self-interested comparison shopping agents. The comparative search conducted by the agents is driven by incentives offered by sellers, the cost incurred by the search, and competition dynamics that arise in the multi-agent setting. Based on models of economic search theory, the paper provides a formal analysis of the strategies used by the agents and the corresponding expected buyers’ expense and sellers’ net revenue. Equilibrium analysis is given for homogeneous environments in which all agents share the same search characteristics. Using this latter environment, it is demonstrated how the transition to competitive comparison-shopping mediated market can in some cases result both with lower expected expense to buyers and higher expected net revenue to sellers.