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pricing on the internet

Author

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  • Michael R. Baye
  • John Morgan

Abstract

While many conjectured that the information-rich and frictionless nature of online markets would result in marginal cost pricing, this has proved not to be the case. Price dispersion online is ubiquitous. The main reason is that price discovery occurs through platforms that have an incentive to ensure that prices are dispersed so that information is valuable. We survey models of platform pricing and trace the impact of their decisions downstream to e-retailers. Finally, we highlight the connection between empirical findings and theory predictions for e-retail pricing.

Suggested Citation

  • Michael R. Baye & John Morgan, 2013. "pricing on the internet," The New Palgrave Dictionary of Economics,, Palgrave Macmillan.
    • Handle: RePEc:pal:dofeco:v:7:year:2013:doi:3895
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    File URL: http://www.dictionaryofeconomics.com/article?id=pde2013_P000379
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    Citations

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    Cited by:

    1. Ali M. Al-Khouri, 2013. "Technological and Mobility Trends in E-Government," Business and Management Research, Business and Management Research, Sciedu Press, vol. 2(3), pages 90-112, September.

    More about this item

    Keywords

    e-retail; internet; network effects; platform; pricing; price dispersion; two-sided market;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • M3 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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