An Empirical Study of Price Dispersion in Homogenous Goods Markets
AbstractThis paper presents the results of an empirical study of price dispersion in homogeneous goods markets. Modern economic theory suggests that inevitable asymmetries of information in markets lead to an equilibrium in which price dispersion is present even when goods are perfectly homogenous. In this paper we present an empirical analysis in which we employ both cross-sectional and time-series data gathered directly from Pricegrabber.com, one of the most popular and comprehensive online shopping/price-comparison sites on the Internet. In particular our analysis focuses on (i) the effect that the number of firms offering a good has on price dispersion, (ii) the informational value to the consumer of using the Pricegrabber website, and (iii) the persistency of price dispersion over time.
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Bibliographic InfoPaper provided by Middlebury College, Department of Economics in its series Middlebury College Working Paper Series with number 0710.
Length: 44 pages
Date of creation: Sep 2007
Date of revision:
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E-commerce; Internet marketing; Price dispersion; Signaling; Search Cost; Gatekeepers; Regression and other statistical techniques JEL Classification: L81; L86; L11;
Find related papers by JEL classification:
- Reg - Urban, Rural, Regional, Real Estate, and Transportation Economics - - - - -
- and - - - - - -
- oth - - - - - -
- sta - - - - - -
- tec - - - - - -
- JEL - Labor and Demographic Economics - - - - -
- Cla - Mathematical and Quantitative Methods - - - - -
- L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
- L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-09-09 (All new papers)
- NEP-COM-2007-09-09 (Industrial Competition)
- NEP-MIC-2007-09-09 (Microeconomics)
- NEP-MKT-2007-09-09 (Marketing)
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