A Study of Pricing Evolution in the Online Toy Market
We examine the pricing trends in the online toy markets based on a unique set of panel data collected across three years’ span. The analysis was made through panel data regression models with error components and serial correlation, allowing comparisons of prices and price dispersions between the two types of online retailers as well as examinations of dynamics of prices and price dispersions. Our results indicate that both online branch of multichannel retailers (OBMCRS) and dotcoms charge similar prices on average, and over time their prices move in tandem. Although the OBMCR retailers charge significantly different prices, the dotcoms do charge similar prices. Moreover, both retailer types demonstrate different magnitudes of price dispersion that move at different rates over time. Although the price dispersion of OBMCRS is higher than that of the dotcoms at the beginning, the gap narrows over time.
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