{"title":"Automated switching services","authors":"Luke Garrod , Ruochen Li , Chris M. Wilson","doi":"10.1016/j.econlet.2023.111351","DOIUrl":null,"url":null,"abstract":"<div><p>Automated switching services have recently emerged as online intermediaries that use algorithms to facilitate consumer switching. Unlike price comparison websites, these services (i) act on behalf of consumers by actively switching them to the cheapest deals, (ii) typically charge consumers directly, rather than charging suppliers commission, and (iii) tend to consider every supplier’s price. We offer the first theoretical analysis of such services. In an oligopoly model with imperfect price information, we characterize an equilibrium with an automated switching service, and analyze its impact on market outcomes and welfare. Among other results, we show how the service’s existence benefits all consumers, despite it only serving some consumers and charging them a fee.</p></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"232 ","pages":"Article 111351"},"PeriodicalIF":2.1000,"publicationDate":"2023-09-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Economics Letters","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0165176523003762","RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
Automated switching services have recently emerged as online intermediaries that use algorithms to facilitate consumer switching. Unlike price comparison websites, these services (i) act on behalf of consumers by actively switching them to the cheapest deals, (ii) typically charge consumers directly, rather than charging suppliers commission, and (iii) tend to consider every supplier’s price. We offer the first theoretical analysis of such services. In an oligopoly model with imperfect price information, we characterize an equilibrium with an automated switching service, and analyze its impact on market outcomes and welfare. Among other results, we show how the service’s existence benefits all consumers, despite it only serving some consumers and charging them a fee.
期刊介绍：
Many economists today are concerned by the proliferation of journals and the concomitant labyrinth of research to be conquered in order to reach the specific information they require. To combat this tendency, Economics Letters has been conceived and designed outside the realm of the traditional economics journal. As a Letters Journal, it consists of concise communications (letters) that provide a means of rapid and efficient dissemination of new results, models and methods in all fields of economic research.
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