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Research Note—Managing e-Marketplace: A Strategic Analysis of Nonprice Advertising

  • Chuan He

    ()

    (Leeds School of Business, University of Colorado at Boulder, Boulder, Colorado 80309-0419)

  • Yuxin Chen

    ()

    (Leonard N. Stern School of Business, New York University, New York, New York 10012)

The e-marketplace has emerged as an important electronic shopping environment that, according to a recent report, may evolve into a dominant force in Internet marketing. We investigate an e-marketplace with online stores offering competing products. We find that featuring is associated with a price premium and serves as a mechanism to mitigate competition among online stores. In essence, featuring facilitates a convenience-price trade-off. Those consumers who find that the cost of searching outweighs the benefit of a lower expected price shop at the featured store where the price is higher on average. We endogenize consumers' decisions on shopping at the featured store or use the search engine to shop at the low-price store and examine the robustness of our results in an -store setting.

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File URL: http://dx.doi.org/10.1287/mksc.1050.0168
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Article provided by INFORMS in its journal Marketing Science.

Volume (Year): 25 (2006)
Issue (Month): 2 (03-04)
Pages: 175-187

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Handle: RePEc:inm:ormksc:v:25:y:2006:i:2:p:175-187
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