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Bias and Size Effects of Price-Comparison Search Engines: Theory and Experimental Evidence

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Author Info
Aurora García-Gallego () (Universitat Jaume I)
Nikolaos Georgantzís () (Universitat Jaume I)
Pedro Pereira () (Autoridade da Concorrência)
José C. Pernías-Cerrillo () (Universitat Jaume I)

Additional information is available for the following registered author(s):

Abstract

This article, analyzes the impact on consumer prices of the size and bias of price comparison search engines. we develop a model, related to Burdett and Judd (1983) and Varian (1980), and test experimentally several theoretical predictions. The experimental results confirm the model’s predictions regarding the impact of the number of firms, and the type of bias of the search engine, but reject the model’s predictions regarding changes in the size of the index.

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File URL: http://www.concorrencia.pt/download/WP20_SearchEngines_Jan07.pdf
File Format: application/pdf
File Function: First version, 2007
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Publisher Info
Paper provided by Portuguese Competition Authority in its series Working Papers with number 20.

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Length: 23 pages
Date of creation: Feb 2007
Date of revision:
Handle: RePEc:pca:wpaper:20

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Related research
Keywords: Search engines incomplete information biased information price levels experiments.

Other versions of this item:

Find related papers by JEL classification:
C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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References listed on IDEAS
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  1. Samuelson, Larry & Zhang, Jianbo, 1992. "Search costs and prices," Economics Letters, Elsevier, vol. 38(1), pages 55-60, January. [Downloadable!] (restricted)
  2. Michael R. Baye & J. Rupert J. Gatti & Paul Kattuman & John Morgan, 2005. "Did the Euro Foster Online Price Competition? Evidence from an International Price Comparison Site," Working Papers 2005-09, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy. [Downloadable!]
    Other versions:
  3. Morgan, John & Orzen, Henrik & Sefton, Martin, 2006. "An experimental study of price dispersion," Games and Economic Behavior, Elsevier, vol. 54(1), pages 134-158, January. [Downloadable!] (restricted)
  4. Michel Benaim & Josef Hofbauer & Ed Hopkins, 2005. "Learning in Games with Unstable Equilibria," Levine's Bibliography 784828000000000609, UCLA Department of Economics. [Downloadable!]
    Other versions:
  5. Pereira, Pedro, 2005. "Do lower search costs reduce prices and price dispersion?," Information Economics and Policy, Elsevier, vol. 17(1), pages 61-72, January. [Downloadable!] (restricted)
    Other versions:
  6. Burdett, Kenneth & Judd, Kenneth L, 1983. "Equilibrium Price Dispersion," Econometrica, Econometric Society, vol. 51(4), pages 955-69, July. [Downloadable!] (restricted)
  7. Dinlersoz, Emin M. & Pereira, Pedro, 2007. "On the diffusion of electronic commerce," International Journal of Industrial Organization, Elsevier, vol. 25(3), pages 541-574, June. [Downloadable!] (restricted)
    Other versions:
  8. Baye, Michael R. & Kovenock, Dan & de Vries, Casper G., 1992. "It takes two to tango: Equilibria in a model of sales," Games and Economic Behavior, Elsevier, vol. 4(4), pages 493-510, October. [Downloadable!] (restricted)
  9. Ed Hopkins & Robert M. Seymour, 2002. "The Stability of Price Dispersion under Seller and Consumer Learning," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(4), pages 1157-1190, November. [Downloadable!] (restricted)
    Other versions:
  10. Michael R. Baye & John Morgan, 2001. "Information Gatekeepers on the Internet and the Competitiveness of Homogeneous Product Markets," American Economic Review, American Economic Association, vol. 91(3), pages 454-474, June. [Downloadable!] (restricted)
  11. Dasgupta, Partha & Maskin, Eric, 1986. "The Existence of Equilibrium in Discontinuous Economic Games, I: Theory," Review of Economic Studies, Blackwell Publishing, vol. 53(1), pages 1-26, January. [Downloadable!] (restricted)
  12. Guimaraes, Paulo, 1996. "Search Intensity in Oligopoly," Journal of Industrial Economics, Blackwell Publishing, vol. 44(4), pages 415-26, December. [Downloadable!] (restricted)
  13. Cason, Timothy N. & Friedman, Daniel, 2003. "Buyer search and price dispersion: a laboratory study," Journal of Economic Theory, Elsevier, vol. 112(2), pages 232-260, October. [Downloadable!] (restricted)
    Other versions:
  14. Varian, Hal R, 1980. "A Model of Sales," American Economic Review, American Economic Association, vol. 70(4), pages 651-59, September. [Downloadable!] (restricted)
  15. Rosenthal, Robert W, 1980. "A Model in Which an Increase in the Number of Sellers Leads to a Higher Price," Econometrica, Econometric Society, vol. 48(6), pages 1575-79, September. [Downloadable!] (restricted)
  16. Michael Smith & Erik Brynjolfsson, 1999. "Frictionless Commerce? A Comparison of Internet and Conventional Retailers," Computing in Economics and Finance 1999 1022, Society for Computational Economics.
  17. Stahl, Dale O, II, 1989. "Oligopolistic Pricing with Sequential Consumer Search," American Economic Review, American Economic Association, vol. 79(4), pages 700-712, September. [Downloadable!] (restricted)
  18. Maarten C. W. Janssen & José Luis Moraga-González, 2004. "Strategic Pricing, Consumer Search and the Number of Firms," Review of Economic Studies, Blackwell Publishing, vol. 71(4), pages 1089-1118, October. [Downloadable!] (restricted)
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