Ying Fan, University of Michigan

Paper: “Dynamic Search in a Non-Stationary Search Environment: An Application to the Beijing Housing Market”

Abstract: This paper investigates how dynamics in the search environment affect consumers’ search and purchase decisions. We develop a dynamic search model with a non-stationary search environment. We estimate the model using data on consumers’ search duration, search intensity in each period, and purchase decision in the Beijing housing market. We find that the dynamics in the search environment have larger effects on consumers’ search and purchase decisions and welfare than traditional search frictions such as search costs. Moreover, we find that a static search model would yield unrealistically high estimates of search costs.