IDEAS home Printed from https://ideas.repec.org/a/bla/jindec/v54y2006i4p425-449.html
   My bibliography  Save this article

Does Information Undermine Brand? Information Intermediary Use And Preference For Branded Web Retailers

Author

Listed:
  • JOEL WALDFOGEL
  • LU CHEN

Abstract

Investments in brand, and third‐party information, provide alternative methods for convincing potential customers that vendors will deliver as promised. This study uses a 13‐month panel dataset on 1998–99 Internet shopping behavior and use of information intermediaries by over 30,000 households to examine whether information use undermines brand. Individuals using price comparison sites substantially increase their level of shopping at unbranded retail sites, while they shop less at Amazon. The results have possible implications for both firm strategy and the evolution of market structure. If information weakens the pull of brand, then Internet retailing may grow less concentrated over time.

Suggested Citation

  • Joel Waldfogel & Lu Chen, 2006. "Does Information Undermine Brand? Information Intermediary Use And Preference For Branded Web Retailers," Journal of Industrial Economics, Wiley Blackwell, vol. 54(4), pages 425-449, December.
    • Handle: RePEc:bla:jindec:v:54:y:2006:i:4:p:425-449
    DOI: 10.1111/j.1467-6451.2006.00295.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1467-6451.2006.00295.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1467-6451.2006.00295.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Clay, Karen, et al, 2002. "Retail Strategies on the Web: Price and Non-price Competition in the Online Book Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 50(3), pages 351-367, September.
    2. Joel Waldfogel & Jeffrey Milyo, 1999. "The Effect of Price Advertising on Prices: Evidence in the Wake of 44 Liquormart," American Economic Review, American Economic Association, vol. 89(5), pages 1081-1096, December.
    3. Michael D. Smith & Erik Brynjolfsson, 2001. "Consumer Decision-making at an Internet Shopbot: Brand Still Matters," NBER Chapters, in: E-commerce, pages 541-558, National Bureau of Economic Research, Inc.
    4. Stigler, George J., 2011. "Economics of Information," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 5, pages 35-49.
    5. D. Grant Devine & Bruce W. Marion, 1979. "The Influence of Consumer Price Information on Retail Pricing and Consumer Behavior," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 61(2), pages 228-237.
    6. Kwoka, John E, Jr, 1984. "Advertising and the Price and Quality of Optometric Services," American Economic Review, American Economic Association, vol. 74(1), pages 211-216, March.
    7. Austan Goolsbee & Judith Chevalier, 2002. "Measuring Prices and Price Competition Online: Amazon and Barnes and Noble," NBER Working Papers 9085, National Bureau of Economic Research, Inc.
    8. Grant Devine & Bruce Marion, 1979. "The influence of consumer price information on retail pricing and consumer behavior," Framed Field Experiments 00138, The Field Experiments Website.
    9. Jeffrey R. Brown & Austan Goolsbee, 2002. "Does the Internet Make Markets More Competitive? Evidence from the Life Insurance Industry," Journal of Political Economy, University of Chicago Press, vol. 110(3), pages 481-507, June.
    10. Erik Brynjolfsson & Michael D. Smith, 2000. "Frictionless Commerce? A Comparison of Internet and Conventional Retailers," Management Science, INFORMS, vol. 46(4), pages 563-585, April.
    11. Michael D. Smith & Erik Brynjolfsson, 2001. "Consumer Decision-making at an Internet Shopbot: Brand Still Matters," NBER Chapters, in: E-commerce, pages 541-558, National Bureau of Economic Research, Inc.
    12. Glenn Ellison & Sara Fisher Ellison, 2009. "Search, Obfuscation, and Price Elasticities on the Internet," Econometrica, Econometric Society, vol. 77(2), pages 427-452, March.
    13. Baltagi, Badi H. & Wu, Ping X., 1999. "Unequally Spaced Panel Data Regressions With Ar(1) Disturbances," Econometric Theory, Cambridge University Press, vol. 15(6), pages 814-823, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Alexia Gaudeul, 2010. "Software marketing on the Internet: the use of samples and repositories," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 19(3), pages 259-281.
    2. Matthew Chesnes & Weijia (Daisy) Dai & Ginger Zhe Jin, 2017. "Banning Foreign Pharmacies from Sponsored Search: The Online Consumer Response," Marketing Science, INFORMS, vol. 36(6), pages 879-907, November.
    3. Michelle Haynes & Steve Thompson, 2013. "Entry and Exit Behavior in the Absence of Sunk Costs: Evidence from a Price Comparison Site," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 42(1), pages 1-23, February.
    4. Jin Li & Kwok Fai Tso & Fangtao Liu, 2017. "Profit earning and monetary loss bidding in online entertainment shopping: the impacts of bidding patterns and characteristics," Electronic Markets, Springer;IIM University of St. Gallen, vol. 27(1), pages 77-90, February.
    5. Alberto Cavaliere, 2005. "Price Competition and Consumer Externalities in a Vertically Differentiated Duopoly with Information Disparities," Journal of Economics, Springer, vol. 86(1), pages 29-64, October.
    6. Hollenbeck, Brett, 2018. "Online Reputation Mechanisms and the Decreasing Value of Chain Affliation," MPRA Paper 91573, University Library of Munich, Germany.
    7. Ya-Ling Chiu & Jiangze Du & Jying-Nan Wang, 2022. "The Effects of Price Dispersion on Sales in the Automobile Industry: A Dynamic Panel Analysis," SAGE Open, , vol. 12(3), pages 21582440221, August.
    8. Steve Thompson, 2009. "Grey Power: An Empirical Investigation of the Impact of Parallel Imports on Market Prices," Journal of Industry, Competition and Trade, Springer, vol. 9(3), pages 219-232, September.
    9. Ajay Agrawal & Christian Catalini & Avi Goldfarb, 2014. "Some Simple Economics of Crowdfunding," Innovation Policy and the Economy, University of Chicago Press, vol. 14(1), pages 63-97.
    10. Matthew Chesnes & Weijia (Daisy) Dai & Ginger Zhe Jin, 2014. "Banning Foreign Pharmacies from Sponsored Search: The Online Consumer Response," NBER Working Papers 20088, National Bureau of Economic Research, Inc.
    11. Ginger Zhe Jin & Phillip Leslie, 2009. "Reputational Incentives for Restaurant Hygiene," American Economic Journal: Microeconomics, American Economic Association, vol. 1(1), pages 237-267, February.
    12. Kershen Huang & Chenguang Shang & Chi Zhang, 2021. "Working hard for long‐distance relationships: Geographic proximity and relationship‐specific investments," Financial Management, Financial Management Association International, vol. 50(4), pages 985-1011, December.
    13. Paul DiMaggio & Eszter Hargittai & Coral Celeste & Steven Shafer, 2003. "From Unequal Access to Differentiated Use: A Literature Review and Agenda for Research on Digital Inequality," Working Papers 29, Princeton University, School of Public and International Affairs, Center for Arts and Cultural Policy Studies..
    14. Hui Feng & Neil A. Morgan & Lopo L. Rego, 2020. "The impact of unprofitable customer management strategies on shareholder value," Journal of the Academy of Marketing Science, Springer, vol. 48(2), pages 246-269, March.
    15. Kartik Hosanagar & Daniel Fleder & Dokyun Lee & Andreas Buja, 2014. "Will the Global Village Fracture Into Tribes? Recommender Systems and Their Effects on Consumer Fragmentation," Management Science, INFORMS, vol. 60(4), pages 805-823, April.
    16. Jifeng Mu & Jonathan Z. Zhang, 2021. "Seller marketing capability, brand reputation, and consumer journeys on e-commerce platforms," Journal of the Academy of Marketing Science, Springer, vol. 49(5), pages 994-1020, September.
    17. Alberto Cavaliere, 2004. "Price Competition with Information Disparities in a Vertically Differentiated Duopoly," Working Papers 2004.39, Fondazione Eni Enrico Mattei.
    18. Mary J. Benner & Todd Zenger, 2016. "The Lemons Problem in Markets for Strategy," Strategy Science, INFORMS, vol. 1(2), pages 71-89, June.
    19. Daniel Fleder & Kartik Hosanagar & Andreas Buja, 2008. "Recommender Systems and their Effects on Consumers: The Fragmentation Debate," Working Papers 08-44, NET Institute, revised Mar 2010.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Brynjolfsson, Erik & Dick, Astrid Andrea & Smith, Michael D., 2004. "Search and Product Differentiation at an Internet Shopbot," Working papers 4441-03, Massachusetts Institute of Technology (MIT), Sloan School of Management.
    2. Jeffrey R. Brown & Austan Goolsbee, 2002. "Does the Internet Make Markets More Competitive? Evidence from the Life Insurance Industry," Journal of Political Economy, University of Chicago Press, vol. 110(3), pages 481-507, June.
    3. Erik Brynjolfsson & Astrid Dick & Michael Smith, 2010. "A nearly perfect market?," Quantitative Marketing and Economics (QME), Springer, vol. 8(1), pages 1-33, March.
    4. Lindgren, Charlie & Daunfeldt, Sven-Olov & Rudholm, Niklas, 2021. "Pricing In Retail Markets With Low Search Costs: Evidence From A Price Comparison Website," HFI Working Papers 18, Institute of Retail Economics (Handelns Forskningsinstitut).
    5. Michael R. Baye & John Morgan & Patrick Scholten, 2004. "Price Dispersion In The Small And In The Large: Evidence From An Internet Price Comparison Site," Journal of Industrial Economics, Wiley Blackwell, vol. 52(4), pages 463-496, December.
    6. Delphine Irac & Claire Célérier & Philippe Askenazy, 2010. "Vente à distance, internet et dynamiques des prix," Économie et Prévision, Programme National Persée, vol. 194(3), pages 1-13.
    7. Jie Jennifer Zhang & Bing Jing, 2007. "The Impacts of Shopbots on Online Consumer Search," Working Papers 07-34, NET Institute, revised Sep 2007.
    8. Haynes, Michelle & Thompson, Steve, 2008. "Price, price dispersion and number of sellers at a low entry cost shopbot," International Journal of Industrial Organization, Elsevier, vol. 26(2), pages 459-472, March.
    9. Li, Han & Dinlersoz, Emin, 2012. "Quality-based Price Discrimination: Evidence from Internet Retailers’ Shipping Options," Journal of Retailing, Elsevier, vol. 88(2), pages 276-290.
    10. Anania, Giovanni & Nistico, Rosanna, 2012. "Price dispersion, search costs and consumers and sellers heterogeneity in retail food markets," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 125594, International Association of Agricultural Economists.
    11. Grewal, Dhruv & Janakiraman, Ramkumar & Kalyanam, Kirthi & Kannan, P.K. & Ratchford, Brian & Song, Reo & Tolerico, Stephen, 2010. "Strategic Online and Offline Retail Pricing: A Review and Research Agenda," Journal of Interactive Marketing, Elsevier, vol. 24(2), pages 138-154.
    12. Zhang, Xubing & Jiang, Bo, 2014. "Increasing Price Transparency: Implications of Consumer Price Posting for Consumers' Haggling Behavior and a Seller's Pricing Strategies," Journal of Interactive Marketing, Elsevier, vol. 28(1), pages 68-85.
    13. Eymann, Torsten (Ed.), 2007. "Tagungsband zum Doctoral Consortium der WI 2007 [WI2007 Doctoral Consortium Proceedings]," Bayreuth Reports on Information Systems Management 24, University of Bayreuth, Chair of Information Systems Management.
    14. Ratchford, Brian T., 2009. "Online Pricing: Review and Directions for Research," Journal of Interactive Marketing, Elsevier, vol. 23(1), pages 82-90.
    15. De los Santos, Babur, 2018. "Consumer search on the Internet," International Journal of Industrial Organization, Elsevier, vol. 58(C), pages 66-105.
    16. Morgan, John & Ong, David & Zhong, Zemin (Zachary), 2018. "Location still matters: Evidence from an online shopping field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 146(C), pages 43-54.
    17. Anindya Ghose & Yuliang Yao, 2011. "Using Transaction Prices to Re-Examine Price Dispersion in Electronic Markets," Information Systems Research, INFORMS, vol. 22(2), pages 269-288, June.
    18. Sulin Ba & Jan Stallaert & Zhongju Zhang, 2012. "Research Note ---Online Price Dispersion: A Game-Theoretic Perspective and Empirical Evidence," Information Systems Research, INFORMS, vol. 23(2), pages 575-592, June.
    19. Xu, Yunjie (Calvin) & Kim, Hee-Woong, 2008. "Order Effect and Vendor Inspection in Online Comparison Shopping," Journal of Retailing, Elsevier, vol. 84(4), pages 477-486.
    20. Edgardo Arturo Ayala Gaytán, 2009. "Social network externalities and price dispersion in online markets," Ensayos Revista de Economia, Universidad Autonoma de Nuevo Leon, Facultad de Economia, vol. 0(2), pages 1-28, November.

    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jindec:v:54:y:2006:i:4:p:425-449. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.