Consumer Search over the Product Life Cycle: Evidence and Implications

Description

In this project, we use granular data from a major online retail platform in Hong Kong to investigate the contribution of consumer search to creative destruction, innovation and growth, through product entry, exit, and prices and sales dynamics over the product life cycle. We measure consumer search efforts using online traffic data, such as clicks and time spent on search. The granular data allows us to track the consumer search and purchase behavior over time and over the product life cycle, with extensive information on consumer, product and seller heterogeneity. We provide motivational facts of consumer search over the product life cycle and lay down future empirical exercises to be conducted to establish the relationship between consumer search and product dynamics. We will then build and estimate a structural model to provide insights on the welfare gain from consumer search as well as policy implications on innovation and growth.