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Price Comparison Websites

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  • David Ronayne

Abstract

The large and growing industry of price comparison websites (PCWs) or “web aggregators” is poised to benefit consumers by increasing competitive pricing pressure on firms by acquainting shoppers with more prices. However, these sites also charge firms for sales, which feeds back to raise prices. I find that introducing any number of PCWs to a market increases prices for all consumers, both those who use the sites and those who do not. I then use my framework to identify ways in which a more competitive environment could be achieved.

Suggested Citation

  • David Ronayne, 2021. "Price Comparison Websites," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(3), pages 1081-1110, August.
  • Handle: RePEc:wly:iecrev:v:62:y:2021:i:3:p:1081-1110
    DOI: 10.1111/iere.12504
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    Citations

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    Cited by:

    1. Motta, Massimo & Penta, Antonio, 2022. "Market Effects of Sponsored Search Auctions," TSE Working Papers 22-1370, Toulouse School of Economics (TSE).
    2. Heiko Karle & Martin Peitz & Markus Reisinger, 2020. "Segmentation versus Agglomeration: Competition between Platforms with Competitive Sellers," Journal of Political Economy, University of Chicago Press, vol. 128(6), pages 2329-2374.
    3. David P. Myatt, 2019. "A Theory of Stable Price Dispersion," Economics Series Working Papers 873, University of Oxford, Department of Economics.
    4. Parakhonyak, Alexei & Titova, Maria, 2018. "Shopping malls, platforms and consumer search," International Journal of Industrial Organization, Elsevier, vol. 58(C), pages 183-213.
    5. David Ronayne, 2020. "The Only Dance in Town: Unique Equilibrium in a Generalized Model of Price Competition," Economics Series Working Papers 874, University of Oxford, Department of Economics.
    6. Amedeo Piolatto & Florian Schuett, 2022. "Information vs Competition: How Platform Design Affects Profits and Surplus," Working Papers 1325, Barcelona School of Economics.
    7. Johannes Johnen & David Ronayne, 2021. "The only Dance in Town: Unique Equilibrium in a Generalized Model of Price Competition," Journal of Industrial Economics, Wiley Blackwell, vol. 69(3), pages 595-614, September.
    8. Ghosh, Meenakshi, 2021. "Consumer naivete and competitive add-on pricing on platforms," MPRA Paper 109981, University Library of Munich, Germany.
    9. Greg Taylor, 2020. "Competing Sales Channels," Economics Series Working Papers 843, University of Oxford, Department of Economics.
    10. Sandro Shelegia & Chris M. Wilson, 2021. "A Generalized Model of Advertised Sales," American Economic Journal: Microeconomics, American Economic Association, vol. 13(1), pages 195-223, February.
    11. Bernhardt, Dan & Constantinou, Evangelos & Shadmehr, Mehdi, 2019. "When do co-located firms selling identical products thrive?," The Warwick Economics Research Paper Series (TWERPS) 1202, University of Warwick, Department of Economics.
    12. Johannes Johnen & Robert Somogyi, 2019. "Deceptive Products on Platforms," Working Papers 19-13, NET Institute.
    13. Klaus Kultti & Tuomas Takalo & Oskari Vähämaa, 2021. "Intermediation in a directed search model," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 30(2), pages 456-471, May.

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