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On the evolution of monopoly pricing in Internet-assisted search markets

Author

Listed:
  • Aurora García-Gallego

    () (LEE & Department of Economics, Universitat Jaume I, Castellón, Spain)

  • Nikolaos Georgantzis

    () (GLOBE & Economics Department, University of Granada, Spain
    LEE & Economics Department, Universitat Jaume I, Castellón-Spain)

  • Ainhoa Jaramillo-Gutiérrez

    () (EriCes & Dpt. of Applied Economics, University of Valencia, Spain)

  • Pedro Pereira

    () (Autoridade da Concorrência and CEFAGE-UE, U. of Evora, Portugal)

  • J. Carlos Pernías-Cerrillo

    () (Economics Department, Universitat Jaume I, Castellón, Spain)

Abstract

We study the evolution of prices in markets assisted by price-comparison engines. We use laboratory data obtained under two industry sizes and two conditions concerning the sample (complete, incomplete) of prices available to informed consumers. Distributions are typically bimodal. One of the two modes, corresponding to monopoly prices, tends to increasingly attract prices over time. The second one, corresponding to interior prices, presents a decreasing trend. Monopoly pricing can be used as an insurance against more competitive (but riskier) behavior. In fact, subjects earning low profits due to interior pricing in the past are more likely to choose monopoly pricing.

Suggested Citation

  • Aurora García-Gallego & Nikolaos Georgantzis & Ainhoa Jaramillo-Gutiérrez & Pedro Pereira & J. Carlos Pernías-Cerrillo, 2013. "On the evolution of monopoly pricing in Internet-assisted search markets," Working Papers 2013/05, Economics Department, Universitat Jaume I, Castellón (Spain).
  • Handle: RePEc:jau:wpaper:2013/05
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Internet Economics; price-comparison search engines; mixed strategy equilibria; experimental economics;

    JEL classification:

    • D0 - Microeconomics - - General
    • D2 - Microeconomics - - Production and Organizations
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L4 - Industrial Organization - - Antitrust Issues and Policies

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