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Price, price dispersion and number of sellers at a low entry cost shopbot

  • Haynes, Michelle
  • Thompson, Steve
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    Shopbots function as market intermediaries by providing unprecedented quantities of information to buyers and sellers. This paper explores the role of market structure across shopbot mediated markets using an unbalanced panel of 399 digital camera models. It extends prior work by using an ultra-low entry cost site, additionally allowing controls for life cycle and popularity effects. We find a robust negative relationship between seller number and price, which persists even as markets become crowded with sellers. The results are capable of either an SCP or a Carlson-McAfee heterogeneous cost interpretation, but observed entry behaviour here is consistent with the latter.

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    Article provided by Elsevier in its journal International Journal of Industrial Organization.

    Volume (Year): 26 (2008)
    Issue (Month): 2 (March)
    Pages: 459-472

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    Handle: RePEc:eee:indorg:v:26:y:2008:i:2:p:459-472
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