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

Author

Listed:
  • García-Gallego Aurora

    () (LEE and Economics Department, Universitat Jaume I, Av. Sos Baynat s/n, 12006-Castellón, Spain)

  • Georgantzís Nikolaos

    (School of Agriculture, Policy and Development, University of Reading (UK) and LEE and Economics Department, Universitat Jaume I, Castellón, Spain)

  • Pereira Pedro

    (Autoridade da Concorrência and CEFAGE-UE, Portugal)

  • Pernías-Cerrillo José C.

    (Economics Department, Universitat Jaume I, Castellón, Spain)

Abstract

We analyze the impact on consumer prices of some information characteristics of price-comparison search platforms. An equilibrium model where vendors compete in prices and consumers do not observe prices, but can obtain price information through a search platform, is developed. The model generates several predictions about the impact on the price distribution of: (i) the size of the search platform’s sample, (ii) whether the search platform’s sample is random, and (iii) the number of vendors in the market. The model’s predictions are tested experimentally. The results confirm the predictions about (ii) and (iii), but reject the model’s predictions about (i).

Suggested Citation

  • García-Gallego Aurora & Georgantzís Nikolaos & Pereira Pedro & Pernías-Cerrillo José C., 2016. "Bias and Size Effects of Price-Comparison Platforms: Theory and Experimental Evidence," Review of Network Economics, De Gruyter, vol. 15(1), pages 1-34, March.
  • Handle: RePEc:bpj:rneart:v:15:y:2017:i:1:p:1-34:n:1
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    References listed on IDEAS

    as
    1. Susan Athey & Glenn Ellison, 2011. "Position Auctions with Consumer Search," The Quarterly Journal of Economics, Oxford University Press, vol. 126(3), pages 1213-1270.
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    More about this item

    Keywords

    experiments; incomplete information; price competition; search platforms; selective information;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • 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

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