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Search, Obfuscation, and Price Elasticities on the Internet

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  • Glenn Ellison
  • Sara Fisher Ellison

Abstract

We examine the competition between a group of Internet retailers who operate in an environment where a price search engine plays a dominant role. We show that for some products in this environment, the easy price search makes demand tremendously price-sensitive. Retailers, though, engage in obfuscation-practices that frustrate consumer search or make it less damaging to firms-resulting in much less price sensitivity on some other products. We discuss several models of obfuscation and examine its effects on demand and markups empirically. Copyright 2009 The Econometric Society.

Suggested Citation

  • Glenn Ellison & Sara Fisher Ellison, 2009. "Search, Obfuscation, and Price Elasticities on the Internet," Econometrica, Econometric Society, vol. 77(2), pages 427-452, March.
    • Handle: RePEc:ecm:emetrp:v:77:y:2009:i:2:p:427-452
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    JEL classification:

    • L8 - Industrial Organization - - Industry Studies: Services
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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