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Price Dispersion in the Online Auction Markets

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  • Sha Luo

Abstract

Along the standard measures of price dispersion, this paper proposes a new method, the residual variance model, to examine the levels of price and price variation within and across 10 kinds of physically identical products on eBay UK. The results find that the price levels and price dispersions on eBay are lower than the ones reported in the prior literature regarding other online markets, but the ’law of one price’ has not prevailed in any sample category. It further suggests an important interaction between the extent of price dispersion and the heterogeneities of consumers and sellers.

Suggested Citation

  • Sha Luo, 2009. "Price Dispersion in the Online Auction Markets," EERI Research Paper Series EERI_RP_2009_07, Economics and Econometrics Research Institute (EERI), Brussels.
    • Handle: RePEc:eei:rpaper:eeri_rp_2009_07
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    File URL: http://www.eeri.eu/documents/wp/EERI_RP_2009_07.pdf
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    References listed on IDEAS

    as
    1. Karen Clay & Ramayya Krishnan & Eric Wolff, 2001. "Prices and Price Dispersion on the Web: Evidence from the Online Book Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 49(4), pages 521-539, December.
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    8. Karen Clay & Ramayya Krishnan & Eric Wolff, 2001. "Prices and Price Dispersion on the Web: Evidence from the Online Book Industry," NBER Chapters, in: E-commerce, pages 521-539, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    Price Dispersion; Online Auction Markets.;

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D49 - Microeconomics - - Market Structure, Pricing, and Design - - - Other

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