AbstractThe terms "window shopping" and "showrooming" refer to the activity in which potential buyers visit a brick-and-mortar store to examine a product but end up either not buying it or buying the product from an online retailer. This paper analyzes potential buyers who differ in their preference for after-sale service that is not offered by online retailers. For some buyers, making a trip to the brick-and-mortar store is costly; however, going to the store to examine the product has the advantage of mitigating the uncertainty as to whether the product will suit the buyer's needs. The model shows that the number of buyers engaged in window shopping behavior exceeds the optimal number, both under duopoly and under joint ownership of the online and walk-in store outlets.
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Bibliographic InfoPaper provided by Federal Reserve Bank of Boston in its series Working Papers with number 13-4.
Date of creation: 2013
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-06-16 (All new papers)
- NEP-COM-2013-06-16 (Industrial Competition)
- NEP-MIC-2013-06-16 (Microeconomics)
- NEP-MKT-2013-06-16 (Marketing)
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