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
Publisher:
ISBN:
Category :
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: Erik Brynjolfsson
Publisher: MIT Press
ISBN: 9780262523301
Category : Business & Economics
Languages : en
Pages : 412
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Book Description
The rapid growth of electronic commerce, along with changes in information, computing, and communications, is having a profound effect on the United States economy. President Clinton recently directed the National Economic Council, in consultation with executive branch agencies, to analyze the economic implications of the Internet and electronic commerce domestically and internationally, and to consider new types of data collection and research that could be undertaken by public and private organizations. This book contains work presented at a conference held by executive branch agencies in May 1999 at the Department of Commerce. The goals of the conference were to assess current research on the digital economy, to engage the private sector in developing the research that informs investment and policy decisions, and to promote better understanding of the growth and socioeconomic implications of information technology and electronic commerce. Aspects of the digital economy addressed include macroeconomic assessment, organizational change, small business, access, market structure and competition, and employment and the workforce.
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: Viacheslav Sheremirov
Publisher:
ISBN:
Category :
Languages : en
Pages : 154
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Book Description
A pivotal question in macroeconomics is how output, employment, and price level react to monetary, fiscal, and productivity shocks, both in business-cycle models and in the data. Sticky prices are often considered as one of the key amplification and propagation mechanisms for such shocks. However, there is still a widespread debate how sticky prices are and why they are sticky. This dissertation sheds a new light on this question. Chapter 1 relies on a relatively understudied measure of price stickiness--cross-sectional dispersion of prices--to distinguish between different models of price rigidity, while Chapter 2 measures price stickiness in online markets. With e-commerce becoming a significantly larger sector of the economy, this is one of the first attempts to understand pricing in online markets from data comparable to those used for brick-and-mortar stores. Since different business-cycle models make conflicting predictions about effects of demand shocks, in Chapter 3 I approach this question empirically by estimating the size of fiscal multipliers from military spending data. Such empirical estimates may help researchers and policymakers to distinguish between various models. In macroeconomic models, the level of price dispersion, which is typically approximated using its relationship with inflation, is a central determinant of welfare, the cost of business cycles, the optimal rate of inflation, and the trade-off between inflation and output stability. While the comovement of price dispersion and inflation implied by standard models is positive, in this dissertation I show that it is actually negative in the data. Chapter 1 shows that sales play a pivotal role: i) if sales are removed from the data, the comovement of price dispersion and inflation turns positive; ii) models in which price dispersion is due to price rigidity cannot quantitatively match the comovement even for regular prices; iii) the Calvo model with sales can quantitatively match both the negative comovement found in the data and the positive comovement for regular prices. Finally, I show that models that fail to match the degree of comovement in the data can significantly mismeasure welfare and its determinants. Chapter 2 focuses on price-setting practices in online markets examined through the lens of a novel dataset on price listings and the number of clicks from the Google Shopping Platform. This unique dataset contains information on price quotes and the number of clicks at the daily frequency for a broad variety of consumer goods and sellers in the US and UK over the period of nearly two years. This chapter provides estimates of the frequency of price adjustment, price synchronization across sellers and goods, as well as the distribution of the sizes of price changes. It compares the estimates for the case when information on quantity margin is observed--as in the scanner data from brick-and-mortar stores--with the case when it is not, which is typical in the literature on online prices. It concludes that many internet prices that do not change often obtain very few clicks. The key findings are the following: First, despite the cost of price change being negligible, prices appear relatively sticky. Second, if the quantity margin is accounted for, prices are much more flexible. It remains a question why low-demand sellers do not adjust their prices often, yet maintain costly price listings on the platform. Third, in spite of low costs of monitoring competitors' prices and high benefits from doing so--since search costs for consumers are low too--there is little price synchronization across sellers. Fourth, the distribution of the sizes of price changes is characterized by a non-trivial mass around zero, which is inconsistent with the state-dependent models with fixed menu costs, but favors time-dependent models of price adjustment. Hence, online prices change infrequently, by a large amount, and are not synchronized across sellers. In Chapter 3, I use a multi-country dataset on disaggregated military spending to document the effect of government expenditure by sector on aggregate output. The data obtained from multiple sources including UN, NATO, and the Stockholm International Peace Research Institute (SIPRI) allow to systematically break down total military expenditure into that on durables versus nondurables and services for 69 countries within 1950-1997 period. I show that the spending multiplier is larger when government spends on durables rather than on nondurables or services, which could be due to differences in price flexibility, intertemporal elasticity of substitution, or some other sectoral factors. Although the estimates suffer from the lack of precision, the finding is robust across data sources and groups of countries. Quantitatively, the durables multiplier could be up to four times as high as that for nondurables and services. I use the dataset to estimate the standard spending multiplier as a litmus test, which results in a conventional fiscal multiplier of the size of about 1 ranging from 0.6 to 1.3 in different samples of countries.
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: Robert Bork
Publisher:
ISBN: 9781736089712
Category :
Languages : en
Pages : 536
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Book Description
The most important book on antitrust ever written. It shows how antitrust suits adversely affect the consumer by encouraging a costly form of protection for inefficient and uncompetitive small businesses.
Author: W. Erwin Diewert
Publisher: University of Chicago Press
ISBN: 0226148572
Category : Business & Economics
Languages : en
Pages : 531
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Book Description
Although inflation is much feared for its negative effects on the economy, how to measure it is a matter of considerable debate that has important implications for interest rates, monetary supply, and investment and spending decisions. Underlying many of these issues is the concept of the Cost-of-Living Index (COLI) and its controversial role as the methodological foundation for the Consumer Price Index (CPI). Price Index Concepts and Measurements brings together leading experts to address the many questions involved in conceptualizing and measuring inflation. They evaluate the accuracy of COLI, a Cost-of-Goods Index, and a variety of other methodological frameworks as the bases for consumer price construction.
Author: Michael R. Baye
Publisher: Elsevier
ISBN: 0762309717
Category : Business & Economics
Languages : en
Pages : 280
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Book Description
The first six chapters of the text examine four broad issues: the role of the Internet in fostering competition, its impact on price dispersion and on business-to-business transactions, and the importance of reputation and trust in the new economy. The last four chapters examine the impact of the Internet on the organization of firms, the efficiency of auctions in the Internet age, how consumers choose websites and acquire product information, and the growing problem of congestion on the Internet.
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.
