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Pricing in a market without apparent horizontal differentiation: Evidence from web hosting services

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  • Michael Thompson
  • Steve Thompson

Abstract

This article explores pricing in a product lacking the conventional attributes of horizontal differentiation—physical location, design, color, etc.—and whose vertical characteristics are precisely specified and capable of rapid imitation. Web hosting exhibits low entry barriers, high turnover and low concentration. We use an electronically collected database covering over 17,500 US and UK product offerings, and find that after controlling for quality reputation and e-visibility characteristics exert a strong positive impact on price. This result from a heterogeneous B2B market, without horizontal differentiation, complements homogeneous B2C research elsewhere in suggesting that price disparities persist, even in ultra-competitive e-markets.

Suggested Citation

  • Michael Thompson & Steve Thompson, 2006. "Pricing in a market without apparent horizontal differentiation: Evidence from web hosting services," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 15(7), pages 649-663.
    • Handle: RePEc:taf:ecinnt:v:15:y:2006:i:7:p:649-663
    DOI: 10.1080/10438590500418968
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    References listed on IDEAS

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    Cited by:

    1. Bogumił Kamiński & Maciej Łatek, 2016. "On asymmetric Bertrand duopoly with price uncertainty," International Journal of Economic Theory, The International Society for Economic Theory, vol. 12(4), pages 303-316, December.
    2. Bryan W. Husted & David B. Allen, 2009. "Strategic Corporate Social Responsibility and Value Creation," Management International Review, Springer, vol. 49(6), pages 781-799, December.
    3. Kaminski, Bogumil & Latek, Maciej, 2012. "A Simple Model of Bertrand Duopoly with Noisy Prices," MPRA Paper 41333, University Library of Munich, Germany.

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