Journal of Industrial Economics · 2002 · 294 citations · 7 references
Retail StrategiesConsumer UncertaintyDigital MarketingConsumer ResearchOnline Customer BehaviorBuying BehaviorPricing PolicyLow–cost InformationSearch CostsInternet RetailersManagementNon–price CompetitionEconomicsPrice FormationMarket BehaviorMarketingElectronic MarketplaceSame Low PriceInteractive MarketingBusinessPrice DiscriminationOnline Book IndustryEconomics Of Information
There are two competing theories about low‑cost information on the web: one predicts uniform low prices across Internet retailers, the other predicts differentiation to avoid intense price competition. The study used April 1999 price data from 107 books across thirteen online and two physical bookstores to compare average prices and dispersion. The analysis found no clear evidence of product differentiation, though Amazon’s substantial premium suggests some differentiation.
Two conflicting predictions have emerged regarding the effect of low–cost information on price. The first states that all Internet retailers will charge the same low price for mass produced goods. The second states that Internet retailers will differentiate to avoid intense price competition. Using data collected in April 1999 on the prices of 107 books in thirteen online and two physical bookstores, we find similar average prices online and in physical stores and substantial price dispersion online. Analysis of product differentiation yields no clear results. The substantial premium charged by Amazon provides indirect evidence of product differentiation.
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Hal R. Varian · American Economic Review · 1980 · 1.4K citations
Sales Management, Professional Selling, Consumer Research +5
Do electronic marketplaces lower the price of goods?
Ho-Guen Lee · Communications of the ACM · 1998 · 419 citations · Full text