On the evolution of monopoly pricing in Internet-assisted search markets
AbstractWe study the evolution of prices in markets assisted by price-comparison engines. We use laboratory data obtained under two industry sizes and two conditions concerning the sample (complete, incomplete) of prices available to informed consumers. Distributions are typically bimodal. One of the two modes, corresponding to monopoly prices, tends to increasingly attract prices over time. The second one, corresponding to interior prices, presents a decreasing trend. Monopoly pricing can be used as an insurance against more competitive (but riskier) behavior. In fact, subjects earning low profits due to interior pricing in the past are more likely to choose monopoly pricing.
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Bibliographic InfoPaper provided by Economics Department, Universitat Jaume I, Castellón (Spain) in its series Working Papers with number 2013/05.
Length: 27 pages
Date of creation: 2013
Date of revision:
Internet Economics; price-comparison search engines; mixed strategy equilibria; experimental economics;
Find related papers by JEL classification:
- D0 - Microeconomics - - General
- D2 - Microeconomics - - Production and Organizations
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- L4 - Industrial Organization - - Antitrust Issues and Policies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-04-27 (All new papers)
- NEP-COM-2013-04-27 (Industrial Competition)
- NEP-EXP-2013-04-27 (Experimental Economics)
- NEP-ICT-2013-04-27 (Information & Communication Technologies)
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