Consumer Search and Product Returns in E-Commerce
- Author(s)
- Maarten Janssen, Cole Williams
- Abstract
E-commerce has led to a surge in products being returned after purchase. We analyze product returns as resulting from a trade-off between the social waste of returns and the search efficiency gains of being able to inspect a product's value after purchase. We find whenever returns are efficient, the market generates too few returns, as the parties involved in the transaction do not internalize the welfare benefit of consumers continuing their search, generating profits for other firms. We also show, despite their consumer-friendly appearance and the private cost of returns, firms may benefit and capture the gains from less costly search.
- Organisation(s)
- Department of Economics
- External organisation(s)
- Durham University
- Journal
- American Economic Journal: Microeconomics
- Volume
- 16
- Pages
- 387-419
- ISSN
- 1945-7669
- Publication date
- 05-2024
- Peer reviewed
- Yes
- Austrian Fields of Science 2012
- 502021 Microeconomics
- Portal url
- https://ucrisportal.univie.ac.at/en/publications/4d670c7d-3db7-4eef-9c68-0d2a0be1cfba