Different Prices for Identical Products? Market Efficiency and the Virtual Location in B2C E-Commerce
AbstractThis paper analyses market efficiency and the role of the virtual location in digital markets using a data set containing more than 23,000 price observations from the online market for contact lenses as well as detailed information about online retailer and product characteristics. The data allow to implement and test the concept of virtual location. The empirical results reveal evidence for lower prices and less price dispersion among e-retailers in comparison to hybrid retailers, which supports the hypothesis of enhanced market efficiency in electronic markets. Furthermore, the results show that an online shop?s virtual location influences its prices and that differences in prices are partially driven by differentiation in retailer service. A decomposition of the price differential reveals that there may indeed be a competition effect. --
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Bibliographic InfoPaper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 03-68.
Date of creation: 2003
Date of revision:
electronic markets; efficiency; virtual location; pricing;
Find related papers by JEL classification:
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
- L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
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