Stephen McDonald and Colin Wren
This paper argues that a firm with multiple brands can obfuscate consumer search by excluding the brands of other firms from a consumer’s consideration set. This is examined empirically by regressing price data for a leading U.K. motor insurance price comparison site (or “shopbot”). It finds that multibrand firms own three-quarters of brands in this market, and that allowing for other brand strategies, they post significantly lower and clustered prices relative to other firms. The firms also conceal their brand ownership, consistent with search obfuscation. The results are not otherwise explained and they have implications for market competitiveness.