Pricing on the Internet
AbstractIt is frequently claimed that the growth of e-commerce has created a more competitive environment. It is argued that lower production costs of online retailers encourages new entry in previously concentrated sectors, and a marked reduction in search costs and switching costs increase the intensity of competition. The limited evidence that exists paints a more mixed picture. Many online markets tend to be advertising- intensive, creating a tendency towards concentration; search and price comparison are not perfect; firms can create product heterogeneity and raise switching costs to dampen price competition. Where firms have some market power, as in the market for information goods, we expect discriminatory pricing to become the norm. Apart from posted prices, the internet has extended the use of auctions, even to relatively low-value goods previously traded in thin local markets. The lowcost, relatively frictionless online auction markets have increased profits as well as economic efficiency, and may emerge as the principal pricing method for a large number of goods and services.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by EconWPA in its series Microeconomics with number 0312007.
Date of creation: 31 Dec 2003
Date of revision:
Note: Type of Document - pdf; prepared on win98; to print on a4;
Contact details of provider:
Web page: http://126.96.36.199
internet; pricing; e-commerce;
Other versions of this item:
- D1 - Microeconomics - - Household Behavior
- D2 - Microeconomics - - Production and Organizations
- D3 - Microeconomics - - Distribution
- D4 - Microeconomics - - Market Structure and Pricing
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-01-08 (All new papers)
- NEP-COM-2004-01-08 (Industrial Competition)
- NEP-IND-2004-01-08 (Industrial Organization)
- NEP-INO-2004-01-08 (Innovation)
- NEP-MIC-2004-01-08 (Microeconomics)
- NEP-NET-2004-01-25 (Network Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Armstrong, Mark, 1996. "Multiproduct Nonlinear Pricing," Econometrica, Econometric Society, vol. 64(1), pages 51-75, January.
- Corts, Kenneth S., 1997. "On the competitive effects of price-matching policies," International Journal of Industrial Organization, Elsevier, vol. 15(3), pages 283-299, May.
- Varian, Hal R, 1980. "A Model of Sales," American Economic Review, American Economic Association, vol. 70(4), pages 651-59, September.
- Varian, Hal R, 1985. "Price Discrimination and Social Welfare," American Economic Review, American Economic Association, vol. 75(4), pages 870-75, September.
- Jean-Charles Rochet & Philippe Chone, 1998. "Ironing, Sweeping, and Multidimensional Screening," Econometrica, Econometric Society, vol. 66(4), pages 783-826, July.
- Paul Klemperer, 1999.
"Auction Theory: A Guide to the Literature,"
- Armstrong, Mark & Vickers, John, 2001. "Competitive Price Discrimination," RAND Journal of Economics, The RAND Corporation, vol. 32(4), pages 579-605, Winter.
- Severin Borenstein & Garth Saloner, 2001. "Economics and Electronic Commerce," Journal of Economic Perspectives, American Economic Association, vol. 15(1), pages 3-12, Winter.
- Simon Latcovich & Howard Smith, 2001. "Pricing, Sunk Costs, and Market Structure Online: Evidence from," Oxford Review of Economic Policy, Oxford University Press, vol. 17(2), pages 217-234, Summer.
- Brown, Jeffrey, 2000.
"Does the Internet Make Markets More Competitive? Evidence from the Life Insurance Industry,"
Working Paper Series
rwp00-007, Harvard University, John F. Kennedy School of Government.
- Jeffrey R. Brown & Austan Goolsbee, 2002. "Does the Internet Make Markets More Competitive? Evidence from the Life Insurance Industry," Journal of Political Economy, University of Chicago Press, vol. 110(3), pages 481-507, June.
- Erik Brynjolfsson & Michael D. Smith, 2000.
"Frictionless Commerce? A Comparison of Internet and Conventional Retailers,"
INFORMS, vol. 46(4), pages 563-585, April.
- 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.
- Rochet, Jean-Charles & Stole, Lars A, 2002. "Nonlinear Pricing with Random Participation," Review of Economic Studies, Wiley Blackwell, vol. 69(1), pages 277-311, January.
- repec:att:wimass:9508 is not listed on IDEAS
- Raymond J. Deneckere & R. Preston McAfee, 1996.
Journal of Economics & Management Strategy,
Wiley Blackwell, vol. 5(2), pages 149-174, 06.
- Austan Goolsbee, 2001.
"Competition in the Computer Industry: Online Versus Retail,"
in: E-commerce, pages 487-499
National Bureau of Economic Research, Inc.
- Goolsbee, Austan, 2001. "Competition in the Computer Industry: Online versus Retail," Journal of Industrial Economics, Wiley Blackwell, vol. 49(4), pages 487-99, December.
- Varian, Hal R, 2000. "Buying, Sharing and Renting Information Goods," Journal of Industrial Economics, Wiley Blackwell, vol. 48(4), pages 473-88, December.
- Yannis Bakos, 2001. "The Emerging Landscape for Retail E-Commerce," Journal of Economic Perspectives, American Economic Association, vol. 15(1), pages 69-80, Winter.
- Glenn Ellison & Sara Fisher Ellison, 2004.
"Search, Obfuscation, and Price Elasticities on the Internet,"
NBER Working Papers
10570, National Bureau of Economic Research, Inc.
- Glenn Ellison & Sara Fisher Ellison, 2009. "Search, Obfuscation, and Price Elasticities on the Internet," Econometrica, Econometric Society, vol. 77(2), pages 427-452, 03.
- David Lucking-Reiley & Daniel F. Spulber, 2001.
"Business-to-Business Electronic Commerce,"
Journal of Economic Perspectives,
American Economic Association, vol. 15(1), pages 55-68, Winter.
- David Lucking-Reiley & Daniel F. Spulber, 2000. "Business-to-Business Electronic Commerce," Vanderbilt University Department of Economics Working Papers 0016, Vanderbilt University Department of Economics.
- Paul Klemperer, 1999. "Auction Theory: A Guide to the Literature," Economics Series Working Papers 1999-W12, University of Oxford, Department of Economics.
- Varian, Hal R., 1989. "Price discrimination," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 10, pages 597-654 Elsevier.
- Wilson, Robert, 1997. "Nonlinear Pricing," OUP Catalogue, Oxford University Press, number 9780195115826, September.
- Just, David R. & Just, Richard E., 2005. "Distributional Implications of the Internet: Can Price Discrimination Improve Farmers’ Welfare?," Working Papers 127074, Cornell University, Department of Applied Economics and Management.
- Gatti, J.R.J. & Kattuman, P., 2003. "Online Price Dispersion Within and Between Seven European Countries," Cambridge Working Papers in Economics 0343, Faculty of Economics, University of Cambridge.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA).
If references are entirely missing, you can add them using this form.