Minimum Price in Search Model
This paper investigates the effects of a low bound price. To do so, a popular and\nempirically proven model (Stahl (89') [11]) is used. The model is extended to include\nan exogenously given bound on prices sellers can offer, excluding prices below such\nbound. The finding are rather surprising - when the bound is set sufficiently high\nexpected price offered (EPO) by sellers drops significantly. The result seem to be\nrobust in the parameters of the model, and driven by the information provided to\nconsumers by such legislation step: when the limitation is set at sufficiently high\nlevels all consumers anticipate the bound price, and searchers reject any price above\nit. As a result sellers offer the bound price as a pure strategy.