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Electronic commerce, consumer search and reailing cost reduction


Author Info

  • Cristina Mazón

    (Universidad Complutense de Madrid. Departamento de Fundamentos del Análisis Económico II)

  • Pedro Pereira

    (Universidad Complutense de Madrid. Departamento de Fundamentos del Análisis Económico II)


This paper explains four things in a unified way. First, how e-commerce can generate price equilibria, where physical shops either compete with virtual hops for consumers with Internet access, or alternatively, sell only to consumers with no Internet access. Second, how these price equilibria might involve price dispersion on-line. Third, why prices may be higher on-line. Fourth, why established firms can, but need not, be more reluctant than newly created firms to adopt ecommerce. For this purpose we develop a model where e-commerce reduces consumers’ search costs, involves trade-offs for consumers, and reduces retailing costs. Este trabajo explica, de manera unificada, cuatro cosas. Primero, cómo el comercio electrónico puede generar equilibrios de precios en los que las tiendas físicas compiten con las tiendas virtuales por los consumidores con acceso a Internet, o, alternativamente, venden sólo a los clientes que no tienen acceso a Internet. Segundo, cómo estos equilibrios de precios pueden generar dispersión de precios en Internet. Tercero, por qué los precios de las tiendas virtuales pueden ser más altos que los de las tiendas físicas. Y cuarto, por qué las empresas establecidas pueden tener menos incentivos que las empresas de nuevas creación para abrir tiendas virtuales. Para ello desarrollamos un modelo en el que el comercio electrónic o reduce los costes de búsqueda de los consumidores, implica un trade-off para los consumidores, y disminuye los costes de producción de las empresas.

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Bibliographic Info

Paper provided by Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico in its series Documentos de Trabajo del ICAE with number 0102.

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Length: 30 page
Date of creation: 2001
Date of revision:
Handle: RePEc:ucm:doicae:0102

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Keywords: Electronic-Commerce; Search; Cost Reduction; Retailing;

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