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Pricing in a market without apparent horizontal differentiation: Evidence from web hosting services

  • Michael Thompson
  • Steve Thompson
Registered author(s):

    This article explores pricing in a product lacking the conventional attributes of horizontal differentiation—physical location, design, color, etc.—and whose vertical characteristics are precisely specified and capable of rapid imitation. Web hosting exhibits low entry barriers, high turnover and low concentration. We use an electronically collected database covering over 17,500 US and UK product offerings, and find that after controlling for quality reputation and e-visibility characteristics exert a strong positive impact on price. This result from a heterogeneous B2B market, without horizontal differentiation, complements homogeneous B2C research elsewhere in suggesting that price disparities persist, even in ultra-competitive e-markets.

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    File URL: http://www.tandfonline.com/doi/abs/10.1080/10438590500418968
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    Article provided by Taylor & Francis Journals in its journal Economics of Innovation and New Technology.

    Volume (Year): 15 (2006)
    Issue (Month): 7 ()
    Pages: 649-663

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    Handle: RePEc:taf:ecinnt:v:15:y:2006:i:7:p:649-663
    Contact details of provider: Web page: http://www.tandfonline.com/GEIN20

    Order Information: Web: http://www.tandfonline.com/pricing/journal/GEIN20

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    1. Vella, Francis & Verbeek, Marno, 1999. "Estimating and Interpreting Models with Endogenous Treatment Effects," Journal of Business & Economic Statistics, American Statistical Association, vol. 17(4), pages 473-78, October.
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    8. Ernst R. Berndt & Robert S. Pindyck & Pierre Azoulay, 2003. "Consumption Externalities and Diffusion in Pharmaceutical Markets: Antiulcer Drugs," Journal of Industrial Economics, Wiley Blackwell, vol. 51(2), pages 243-270, 06.
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