The Value of Information in an Online Consumer Electronics Market

Abstract

Consumers who bought electronics products at the lowest prices on Shopper.com during 2000 and 2001 saved an average of 16% off the average listed price. The value of the information provided by a service such as Shopper.com depends on the size of the market, which is consistent with a variety of theories. When two firms list prices, consumers save 11% by purchasing at the lowest price rather than at the average price. These savings jump to 20% when more than 30 firms list prices. However, the potential savings accrue only to consumers on the “right” side of the digital divide.