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Price dynamics and shake-outs in electronic markets

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  • Pereira, Pedro

Abstract

This paper presents a model that explains the recent evolution of e-commerce, where over time, prices can increase if no exit occurs, or decrease, if exit occurs. In the model there is uncertainty about the firms' costs, because the technology is new, and consumers face a switching cost, because it is easier to observe the current price of a previous supplier, than the price of other firms.

Suggested Citation

  • Pereira, Pedro, 2001. "Price dynamics and shake-outs in electronic markets," UC3M Working papers. Economics we016823, Universidad Carlos III de Madrid. Departamento de Economía.
    • Handle: RePEc:cte:werepe:we016823
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