IDEAS home Printed from https://ideas.repec.org/p/tin/wpaper/20000042.html
   My bibliography  Save this paper

Pricing, Consumer Search and the Size of Internet Markets

Author

Listed:
  • Maarten C.W. Janssen

    (Erasmus University Rotterdam)

  • Jose Luis Moraga

    (Groningen University)

Abstract

Despite the mixed empirical evidence, many economists stillhold to the view that Internet will promote competition betweenfirms,thereby lowering prices and increasing economic welfare. This paperpresents a search model that provides a different view. We analyzethemarket for a homogeneous good where some consumers are fully informedwhile others are not. Depending on the parameter values, there may bethree types of equilibria and the comparative statics results aredifferent for each of these equilibria. For example, a reduction insearch cost may raise equilibrium prices when consumers' searchintensity is low, but reduce prices when consumers search intensityis high. These different comparative statics results may explain themixed empirical evidence found so far.

Suggested Citation

  • Maarten C.W. Janssen & Jose Luis Moraga, 2000. "Pricing, Consumer Search and the Size of Internet Markets," Tinbergen Institute Discussion Papers 00-042/1, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20000042
    as

    Download full text from publisher

    File URL: https://papers.tinbergen.nl/00042.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Michael R. Baye & John Morgan & Patrick Scholten, 2006. "Persistent Price Dispersion in Online Markets," Chapters, in: Dennis W. Jansen (ed.), The New Economy and Beyond, chapter 6, Edward Elgar Publishing.
    2. Michael R. Baye & John Morgan & Patrick Scholten, 2004. "Price Dispersion In The Small And In The Large: Evidence From An Internet Price Comparison Site," Journal of Industrial Economics, Wiley Blackwell, vol. 52(4), pages 463-496, December.
    3. Michael R. Baye & John Morgan, 2004. "Price Dispersion in the Lab and on the Internet: Theory and Evidence," RAND Journal of Economics, The RAND Corporation, vol. 35(3), pages 448-466, Autumn.
    4. Randy A. Nelson & Richard Cohen & Frederik Roy Rasmussen, 2007. "An Analysis of Pricing Strategy and Price Dispersion on the Internet," Eastern Economic Journal, Eastern Economic Association, vol. 33(1), pages 95-110, Winter.
    5. Martin Sefton & John Morgan, 2001. "Information externalities in a model of sales," Economics Bulletin, AccessEcon, vol. 4(7), pages 1-5.
    6. Glenn Ellison & Sara Fisher Ellison, 2009. "Search, Obfuscation, and Price Elasticities on the Internet," Econometrica, Econometric Society, vol. 77(2), pages 427-452, March.
    7. Borraz, Fernando & Livan, Giacomo & Rodríguez-Martínez, Anahí & Picardo, Pablo, 2022. "Price, sales, and the business cycle: Microeconomic evidence," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 3(1).

    More about this item

    Keywords

    Internet; price dispersion; search; search agents;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tin:wpaper:20000042. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tinbergen Office +31 (0)10-4088900 (email available below). General contact details of provider: https://edirc.repec.org/data/tinbenl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.