Search Costs

Search cost is the cost of finding something. Every transaction requires search. A successful transaction requires that a buyer and seller find each other. The time, effort and money that takes is called search cost. If it takes you weeks or months to find a house that you want to live in, that time and effort you expended is the cost of your search.

The internet has lowered search costs. For example, the internet has made it much easier to buy and sell second-hand books, leading to a collapse in "back-list" book sales. It has also made it easier to find more obscure items for sale online, leading to the "long tail" phenomenon in online sales.

See this video about developing a way to search NetFlix movies for ones you'll like.

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