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The Virtual Location of E-Tailers: Evidence from a B2C E-Commerce Market

  • Häring, Julia
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    An Internet retailer?s (e-tailer?s) outstanding virtual location enhances the probability of being noticed by potential customers. The notion of a virtual location for e-tailers refers to the analogy to the physical location. In the empirical analysis, an e-tailer?s Internet search engine rank as well as its advertising activities in search engines serve as proxies for the virtual location. The results suggest that it is optimal for e-tailers to complement a high search engine rank with investments in online advertising. Moreover, banner ads seem to serve as price advertising mechanism, whereas sponsored links rather seem to be used in order to signal outstanding customer service.

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    Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 05-52.

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    Date of creation: 2005
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    Handle: RePEc:zbw:zewdip:4278
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    1. Smith, Michael D & Brynjolfsson, Erik, 2001. "Consumer Decision-Making at an Internet Shopbot: Brand Still Matters," Journal of Industrial Economics, Wiley Blackwell, vol. 49(4), pages 541-58, December.
    2. Michael R. Baye & John Morgan & Patrick Scholten, 2004. "Price Dispersion In The Small And In The Large: Evidence From An Internet Price Comparison Site," Journal of Industrial Economics, Wiley Blackwell, vol. 52(4), pages 463-496, December.
    3. Michael R. Baye & John Morgan, 2001. "Information Gatekeepers on the Internet and the Competitiveness of Homogeneous Product Markets," American Economic Review, American Economic Association, vol. 91(3), pages 454-474, June.
    4. Benham, Lee, 1972. "The Effect of Advertising on the Price of Eyeglasses," Journal of Law and Economics, University of Chicago Press, vol. 15(2), pages 337-52, October.
    5. Baye, Michael & Morgan, John, 2004. "Brand and Price Advertising in Online Markets," Competition Policy Center, Working Paper Series qt9760k3hz, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
    6. Michael R. Baye & J. Rupert J. Gatti & Paul Kattuman & John Morgan, 2005. "Estimating Firm-Level Demand at a Price Comparison Site: Accounting for Shoppers and the Number of Competitors," Microeconomics 0504005, EconWPA.
    7. Morgan, John & Orzen, Henrik & Sefton, Martin, 2006. "A laboratory study of advertising and price competition," European Economic Review, Elsevier, vol. 50(2), pages 323-347, February.
    8. Smith, Richard J & Blundell, Richard W, 1986. "An Exogeneity Test for a Simultaneous Equation Tobit Model with an Application to Labor Supply," Econometrica, Econometric Society, vol. 54(3), pages 679-85, May.
    9. Kwoka, John E, Jr, 1984. "Advertising and the Price and Quality of Optometric Services," American Economic Review, American Economic Association, vol. 74(1), pages 211-16, March.
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