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Author: Tomasz Galewski
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Until recently, Internet was considered as technology that will make the trade in goods frictionless. Online retailers' margins were to fall to zero and prices - according to theory of economics - were to equalize as a result of buyers comparing prices more easily (e.g. using shop bots). Empirical research performed so far has not proven these expectations right. Studies in many countries show that online prices vary significantly (sometimes price dispersion in the Internet is higher than that in traditional trade). The purpose of this article is to present a critical view on the methods of measuring price dispersion in e-commerce. Researchers of this area use different measures of price differentials, include shipping costs or not, use the proposed price or try to determine transaction prices, reject part of the data considered as outliers that may indicate a hidden heterogeneity of a product. Some scientists also try to justify price dispersion with the reputation of a vendor, and also additional features of the sellers such as the amount of information presented in the offer, convenience of shopping, userfriendly interface, etc. All these factors are problematic for the research due to lack of a clear (and proper) way of measuring the mentioned attributes. Most of the previous studies also ignored the pricing strategy of vendors, which is a very important factor for price dispersion - it may involve reduction in prices of several products in order to attract customers to the store to buy other products with a much higher margin.
Author: Tomasz Galewski
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Until recently, Internet was considered as technology that will make the trade in goods frictionless. Online retailers' margins were to fall to zero and prices - according to theory of economics - were to equalize as a result of buyers comparing prices more easily (e.g. using shop bots). Empirical research performed so far has not proven these expectations right. Studies in many countries show that online prices vary significantly (sometimes price dispersion in the Internet is higher than that in traditional trade). The purpose of this article is to present a critical view on the methods of measuring price dispersion in e-commerce. Researchers of this area use different measures of price differentials, include shipping costs or not, use the proposed price or try to determine transaction prices, reject part of the data considered as outliers that may indicate a hidden heterogeneity of a product. Some scientists also try to justify price dispersion with the reputation of a vendor, and also additional features of the sellers such as the amount of information presented in the offer, convenience of shopping, userfriendly interface, etc. All these factors are problematic for the research due to lack of a clear (and proper) way of measuring the mentioned attributes. Most of the previous studies also ignored the pricing strategy of vendors, which is a very important factor for price dispersion - it may involve reduction in prices of several products in order to attract customers to the store to buy other products with a much higher margin.
Author: René Böheim
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Languages : en
Pages :
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Book Description
We analyze price dispersion using panel data from a large price comparison site. We use past pricing behavior to instrument for potential endogeneity that might result from the selection of firms to certain product markets. We find that greater price adjustment costs result in greater price dispersion. Although the impact of price adjustment costs on price dispersion became weaker over time, the causal effect of price adjustment costs on price dispersion is still present at the end of the period. Our results are robust to many alternative empirical specifications. We also test a range of alternative explanations of price dispersion, such as search cost, service differentiation, obfuscation, vertical restraints, and market structure.
Author: Rentong Luan
Publisher:
ISBN: 9780355260458
Category :
Languages : en
Pages : 132
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Book Description
I study price dispersion and the impact of market concentration and reputation using data collected from China's online markets for consumer electronics. The data provides not only the price information but also the recent sales volume for each seller. It shows that price dispersion does not diminish over time. Although I draw the same conclusion as the research on US market using the gap measurement between the two lists with lowest prices, I find the gap measurement itself is not an effective indicator. Using proper measurement of price dispersion, I find the dispersion is larger in larger markets, which contradicts the findings from data which do not include sales information. Moreover, I find the reputation and services provided by online sellers has little impact on their prices, except for the registered sellers.
Author: Sulin Ba
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
The Internet has changed the nature of doing business as well as the nature of competition in many industries. Consumers are more empowered than ever with valuable information such as prices, products, and store ratings. Because of this, some researchers even predicted, during the early stage of e-commerce, a frictionless economy in which online prices would be driven down to marginal costs. However, many studies have subsequently observed the wide price dispersion online, and its existence and persistence has now been well documented. Possible explanations of this price dispersion, derived mainly using hedonic price models, have seen only modest success. In this paper, we propose an alternative competitive model, based on online retailers' differentiation, to explain price dispersion. We empirically test the predictions of this model and find that the model is a viable alternative to the hedonic price model. In addition, our competitive model is able to predict and explain observations that are seemingly inconsistent with a hedonic model. Practically, our model yields important recommendations for the online etailing industry and can help an e-tailer to choose a desirable position in the competitive market.
Author: Ying Zhao
Publisher:
ISBN:
Category :
Languages : en
Pages : 250
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Author: David DiRusso
Publisher:
ISBN:
Category :
Languages : en
Pages : 171
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Book Description
This dissertation is a compilation of three essays that analyze price dispersion in an online retail marketplace. Price dispersion is a measure of the variation in prices that sellers charge for products. Online price dispersion has been thoroughly analyzed in the past decade as it has numerous implications for firm pricing strategy as well as consumer welfare. Chapter 1 of this dissertation offers a literature review of price dispersion research, and discusses key explanations as to why this phenomenon exists on the web. Also, a literature review of shop-bots is presented as they are similar to online marketplaces and form the basis of the three studies. Chapter 2 is the first study, and it establishes the existence of price dispersion in online marketplaces and offers a comparison with price dispersion in shop-bots. It is determined that online marketplaces may have less variation than on shop-bots, yet the price dispersion is still high. Chapter 3 is the second study and it explains much of the dispersion found in the online marketplace through differences in seller service quality and seller reputation. A seller's reputation was found to be the key contributor to variation in the online marketplace hence, study 3, which is chapter 4 of this dissertation, employs an experimental approach designed to offer a perspective of buyers and sellers to determine why price varies with reputation and if consumers value the reputation score. It was determined that buyers prefer sellers with strong long run reputation scores more than sellers with strong short-term reputation scores. Based on these reputation scores sellers want to try to offer a higher price than consumers are willing to pay, and sellers think that a strong score conveys higher levels of trust than buyers believe. This mismatch between how sellers think consumers respond, and how the consumers actually respond could be another driver of price dispersion online. A discussion of the implications of these research studies is offered in Chapter 5.
Author: Xing Pan
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
The explosive growth in Internet retailing has sparked a stream of research on online price dispersion, defined as the distribution of prices (such as range and standard deviation) of an item with the same measured characteristics across sellers of the item at a given point in time. In this paper, we review the empirical and analytical literature on online price dispersion and outline the future directions in this research stream. We address the issue of whether price dispersion is greater or smaller online than offline, examine whether price dispersion on the Internet has changed over time, discuss multichannel retailing and measurement of price dispersion, explore why Internet price dispersion exists, and examine the drivers of online price dispersion.
Author: Benjamin Eden
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Category :
Languages : en
Pages :
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Author: Anindya Ghose
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Category :
Languages : en
Pages : 0
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Price dispersion is an important indicator of market efficiency. Internet-based electronic markets have the potential to reduce transaction and search costs, thereby creating more efficient, “frictionless,” markets as predicted by theories in information economics. However, prior work has reported significant levels of price dispersion on the Internet, which is in contrast to theoretical predictions. A key feature of the existing stream of work has been its use of posted prices to estimate price dispersion. In theory, this can lead to an overestimation of price dispersion because a sale may not have occurred at the posted price. In this research, we use a unique dataset of actual transaction prices collected from both the electronic and offline markets of buyers in a B2B market to evaluate the extent of price dispersion. We find that price dispersion in the electronic market is as low as 0.22%, which is substantially less than those reported in the existing literature. This near-zero price dispersion suggests that in some electronic markets the “law of one price” can prevail when we consider transaction prices instead of posted prices. We further develop a theoretical framework that identifies several new drivers of price dispersion using transaction data. In particular, we focus on four product-level and market-level attributes - product cost, order cycle time, own price elasticity and transaction quantity, and estimate their impact on price dispersion. We also examine the electronic market's moderating role in the relationship between these drivers and price dispersion. Finally, we estimate the efficiency gains accruing from transactions in the relatively friction-free market and find that the electronic market can enhances consumer surplus by as much as $97.92 million per year.
Author: Chiaen John Wu
Publisher:
ISBN:
Category : Consumers' preferences
Languages : en
Pages : 276
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