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Price, price dispersion and number of sellers at a low entry cost shopbot

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  • Haynes, Michelle
  • Thompson, Steve
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    Abstract

    Shopbots function as market intermediaries by providing unprecedented quantities of information to buyers and sellers. This paper explores the role of market structure across shopbot mediated markets using an unbalanced panel of 399 digital camera models. It extends prior work by using an ultra-low entry cost site, additionally allowing controls for life cycle and popularity effects. We find a robust negative relationship between seller number and price, which persists even as markets become crowded with sellers. The results are capable of either an SCP or a Carlson-McAfee heterogeneous cost interpretation, but observed entry behaviour here is consistent with the latter.

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    Bibliographic Info

    Article provided by Elsevier in its journal International Journal of Industrial Organization.

    Volume (Year): 26 (2008)
    Issue (Month): 2 (March)
    Pages: 459-472

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    Handle: RePEc:eee:indorg:v:26:y:2008:i:2:p:459-472

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    Web page: http://www.elsevier.com/locate/inca/505551

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    1. Rosenthal, Robert W, 1980. "A Model in Which an Increase in the Number of Sellers Leads to a Higher Price," Econometrica, Econometric Society, Econometric Society, vol. 48(6), pages 1575-79, September.
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    17. Michael R. Baye & J. Rupert J. Gatti & Paul Kattuman & John Morgan, 2005. "Estimating Firm-Level Demand at a Price Comparison Site: Accounting for Shoppers and the Number of Competitors," Microeconomics, EconWPA 0504005, EconWPA.
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    Cited by:
    1. Franz Hackl & Michael E. Kummer & Rudolf Winter-Ebmer & Christine Zulehner, 2012. "Market Structure and Market Performance in E-Commerce," Economics working papers 2012-07, Department of Economics, Johannes Kepler University Linz, Austria.
    2. Anania, Giovanni & Nisticò, Rosanna, 2014. "Price dispersion and seller heterogeneity in retail food markets," Food Policy, Elsevier, Elsevier, vol. 44(C), pages 190-201.
    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, vol. 42(1), pages 1-23, February.
    4. Dmitry Ryvkin & Danila Serra, 2013. "Does Competition Among Public Officials Reduce Corruption? An Experiment," Departmental Working Papers 1301, Southern Methodist University, Department of Economics.
    5. Chhabra, Meenal & Das, Sanmay & Sarne, David, 2014. "Expert-mediated sequential search," European Journal of Operational Research, Elsevier, vol. 234(3), pages 861-873.
    6. 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, International Association of Agricultural Economists 125594, International Association of Agricultural Economists.

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