Using transaction prices to re-examine price dispersion in electronic markets

Information Systems Research

Volumn 22, Issue 2, 2011, Pages 269-288

  Ghose, Anindya ^a   Yao, Yuliang ^b  

^a NEW YORK UNIVERSITY   (United States)

^b LEHIGH UNIVERSITY   (United States)

Author keywords

Consumer surplus; Demand estimation; Econometrics; Electronic markets; Internet commerce; Price dispersion; Transaction prices

Indexed keywords

EID: 79960725560     PISSN: 10477047     EISSN: 15265536     Source Type: Journal    
DOI: 10.1287/isre.1090.0252     Document Type: Article

References (84)

1. Amemiya, T. 1973. Regression analysis when the dependent variable is truncated normal. Econometrica 41(6) 997-1016.
2. Ancarani, F., V. Shankar. 2004. Price levels and price dispersion within and across multiple retailer types: Further evidence and extension. J. Acad. Marketing Sci. 32(2) 176-187.
3. Arcelus, F., T. Pakkala, G. Srinivasan. 2002. A framework for B2B pricing decisions and risk-sharing in supply chains. Decision Sci. 33(4) 645-672.
4. Arellano, M., S. Bond. 1991. Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. Rev. Econom. Stud. 58(2) 277-297.
5. Arellano, M., O. Bover. 1995. Another look at instrumental variable estimation of error component models. J. Econom. (68) 29-52.
6. Bailey, J. P. 1998. Intermediation and electronic markets: Aggregation and pricing in Internet commerce. Ph.D. thesis, Technology, Management, and Policy, MIT, Cambridge, MA.
7. Bailey, J., S. Faraj, Y. Yao. 2007. The road more traveled: Web traffic and price competition in Internet retailing. Electronic Markets 17(1) 56-67.
8. Bakos, J. Y. 1997. Reducing buyer search costs: Implications for electronic marketplaces. Management Sci. 43(12) 1676-1692.
9. Bapna, R., W. Jank, G. Shmueli. 2008. Consumer surplus in online auctions. Inform. Systems Res. 19(4), 400-416.
10. Barron, J., B. Taylor, J. Umbeck. 2004. Number of sellers, average prices, and price dispersion, Internat. J. Indust. Organ. 22(8-9) 1041-1066.
11. Baye, M. R., J. Morgan, P. Scholten. 2003. The value of information in an online consumer market. J. Public Policy Marketing 22 17-25.
12. Baye, M. R., J. Morgan, P. Scholten. 2004. Price dispersion in the small and in the large: Evidence from an Internet price comparison site. J. Indust. Econom. 52(4) 463-496.
13. Baye, M. R., J. Morgan, P. Scholten. 2006a. Persistent price dispersion in online markets. D. Jansen, E. Elgar, eds. The New Economy. University of Chicago Press, Chicago, 122-143.
14. Baye, M. R., J. Morgan, P. Scholten. 2006b. Information, search, and price dispersion. Handbook of Economics and Information Systems. Elsevier, Amsterdam.
15. Baylis, K., J. Perloff. 2002. Price dispersion on the Internet: Good firms and bad firms. Rev. Indust. Organ. 21 305-324.
16. Berry, S. 1994. Estimating discrete-choice models of product differentiation. RAND J. Econom. 25(2) 242-262.
17. Betancourt, R., D. Gautschi. 1993. Two essential characteristics of retail markets and their economic consequences. J. Econom. Behav. Organ. 21(3) 277-294.
18. Blundell, R., S. Bond. 1998. Initial conditions and moment restrictions in dynamic panel data models. J. Econom. 87 115-143.
19. Borenstein, S. 1989. Hubs and high fares: Dominance and market power in the U.S. airline industry. RAND J. Econom. 20(3) 344-365.
20. Brown, J., A. Goolsbee. 2002. Does the Internet make markets more competitive? Evidence from the life insurance industry. J. Political Econom. 110(3) 481-507.
21. Brynjolfsson, E., M. D. Smith. 2000. Frictionless commerce? A comparison of Internet and conventional retailers. Management Sci. 46(4) 563-585.
22. Brynjolfsson, E., Y. Hu, M. D. Smith. 2003. Consumer surplus in the digital economy: Estimating the value of increased product variety at online booksellers. Management Sci. 49(11) 1580-1596.
23. Cachon, G., C. Terwiesch, Y. Xu. 2007. On the effects of consumer search and firm entry in a multiproduct competitive market. Marketing Sci. 461-473.
24. Cao, Y., T. Gruca. 2004. The influence of pre- and post-purchase service on prices in the online book market. J. Interactive Marketing 18(4) 51-62.
25. Cao, Y., T. Gruca, B. Klemz. 2003. Internet pricing, price satisfaction, and customer satisfaction. Internat. J. Electronic Commerce 8(2) 31-50.
26. Chellappa, R. K., R. G. Sin, S. Siddarth. 2011. Price formats as a source of price dispersion: A study of online and offline prices in the domestic U.S. airline market. Inform. Systems Res. Forthcoming.
27. Chen, P. Y., L. Hitt. 2003. Understanding price dispersion in Internet-enabled markets. Working paper, Wharton School of Business, University of Pennsylvania, Philadelphia.
28. Chevalier, J., A. Goolsbee. 2003. Measuring prices and price competition online: Amazon and Barnes and Noble. Quant. Marketing Econom. 1(2) 203-222.
29. Clay, K., C. H. Tay. 2001. Cross-country price differentials in the online textbook market. Working paper, Carnegie Mellon University, Pittsburgh.
30. Clay, K., R. Krishnan, E. Wolff. 2001. Prices and price dispersion on the Web: Evidence from the online book industry. J. Indust. Econom. 49(4) 521-539.
31. Clay, K., R. Krishnan, E. Wolff, D. Fernandes. 2002. Retail strategies on the Web: Price and non-price competition in the online book industry. J. Indust. Econom. 50(3) 351-367.
32. Clemons, E. K., S. P. Reddi. 1993. The impact of information technology on the organization of economic activity: The "move to the middle" hypothesis. J. Management Inform. Systems 10(2) 9-36.
33. Clemons, E. K., I. H. Hann, L. Hitt. 2002. Price dispersion and differentiation in online travel: An empirical investigation. Management Sci. 48(4) 534-549.
34. Dinlersoz, E. M., H. Li. 2006. The shipping strategies of Internet retailers: Evidence from Internet book retailing. Quant. Marketing Econom. 4(4) 407-438.
35. Ellison, G., S. F. Ellison. 2005. Search, obfuscation, and price elasticities on the Internet. Working paper, Sloan School of Management, MIT, Cambridge, MA.
36. Erevelles, S., E. Rolland, S. Srinivasan. 2001. Are prices really lower on the Internet? An analysis of the vitamin industry. Working paper, University of California, Riverside, Riverside, CA.
37. Ford, D. 2002. The Business Marketing Course: Managing in Complex Networks. Wiley, Chichester, UK.
38. Forman, C., A. Ghose, A. Goldfarb. 2009. Competition between local and electronic markets: How the benefit of buying online depends on where you live. Management Sci. 55(1) 47-57.
39. Garbade, K., W. Silber. 1976. Price dispersion in the government securities market. J. Political Econom. 84(4) 721-740.
40. Gatti, R., P. Kattuman. 2003. Online price dispersion within and between seven European countries. Advances in Applied Microeconomics, Economics of the Internet and e-Commerce, Vol. 12. Elsevier Science, Amsterdam, 89-102.
41. Ghose, A., T. Mukhopadhyay, U. Rajan. 2007. The impact of Internet referral services on a supply chain. Inform. Systems Res. 18(3) 300-319.
42. Ghose, A., M. D. Smith, R. Telang. 2006. Internet exchanges for used books: An empirical analysis of product cannibalization and welfare impact. Inform. Systems Res. 17(1) 3-19.
43. Gottlieb, M. 1959. Price and value in industrial markets: Econom. J. 69(273) 22-38.
44. Granados, N., A. Gupta, R. J. Kauffman. 2009. Online and offline demand and price elasticities: Evidence from the air industry. Working Paper 2009-04, Management Information Systems Research Center, University of Minnesota, Minneapolis- St. Paul, http://misrc.csom.umn.edu/workingpapers/.
45. Greene, W. H. 1999. Econometric Analysis. Prentice Hall, Upper Saddle River, NJ.
46. Grewal, D., H. Marmorstein. 1994. Market price variation, perceived price variation, and consumers' price search decisions for durable goods. J. Consumer Res. 21(3) 453-460.
47. GSA. 2001. Annual report. Accessed September 2007, http://www.gsa.gov.
48. Hausman, J. A., G. Leonard. 2002. The competitive effects of a new product introduction: A case study. J. Indust. Econom. 50(3) 237-263.
49. Hicks, J. R. 1942. Consumers' surplus and index numbers. Rev. Econom. Stud. 9(2) 126-137.
50. Kelkar, O., J. Leukel, V. Schmitz. 2002. Towards extended price models in XML standards for electronic product catalogs. Enterprise Inform. Systems 251-259.
51. Kennedy, P. 2003. A Guide to Econometrics, 5th ed. MIT Press, Cambridge, MA.
52. Kuksov, D. 2004. Buyer search costs and endogenous product design. Marketing Sci. 23(4) 490-499.
53. Lilien, G. L. 1987. Business marketing: Present and future. Indust. Marketing Purchasing 2(3) 3-21.
54. Lindsey-Mullikin, J. D., Grewal. 2006. Imperfect information: The persistence of price dispersion on the Web. J. Acad. Marketing Sci. 34(2) 236-243.
55. Lynch, J., D. Ariely. 2000. Wine online: Search costs affect competition on price, quality, and distribution. Marketing Sci. 19(1) 83-103.
56. MacMinn, R. D. 1980. Search and market equilibrium. J. Political Econom. 88(2) 308-327.
57. McDonald, J., R. Moffitt. 1980. The uses of tobit analysis. Rev. Econom. Statist. 62(2) 318-321.
58. Monroe, K. B. 1971. Measuring price thresholds by psychophysics and latitudes of acceptance. J. Marketing Res. 18 460-464.
59. Nieberding, J., R. Cantor. 2007. Price dispersion and class certification in antitrust cases: An economic analysis. J. Legal Econom. 14(2) 61-84.
60. Pan, X., B. Ratchford, V. Shankar. 2002. Can price dispersion in online markets be explained by differences in e-tailer service quality? J. Acad. Marketing Sci. 30(4) 433-445.
61. Pan, X., B. T. Ratchford, V. Shankar. 2003a. Why aren't the prices of the same item the same at Me.com and You.com? Drivers of price dispersion among e-tailers. Working paper, Indiana University, Bloomington, IN.
62. Pan, X., V. Shankar, B. T. Ratchford. 2003b. The evolution of price dispersion in the Internet retail markets. Adv. Appl. Microeconom. 12 85-105.
63. Pan, X., B. T. Ratchford, V. Shankar. 2004. Price dispersion on the Internet: A review and directions for future research. J. Interactive Marketing 18(4) 116-135.
64. Perloff, J., S. Salop. 1985. Equilibrium with product differentiation. Rev. Econom. Stud. 52 107-120.
65. Pratt, J. W., D. A. Wise, R. Zeckhauser. 1979. Price differences in almost competitive markets. Quart. J. Econom. 93(2) 189-211.
66. Ratchford, B., X. Pan, V. Shankar. 2003. One the efficiency of Internet markets for consumer goods. J. Public Policy Marketing 22(1) 4-16.
67. Reuter, P., J. Caulkins. 2004. Illegal lemons: Price dispersion in cocaine and heroin markets. Bulletin Narcotics LVI(1 and 2). 141-165.
68. Salop, S., J. Stiglitz. 1977. Bargains and ripoffs: A model of monopolistically competitive price dispersion. Rev. Econom. Stud. 44 493-510.
69. Samuelson, L., J. Zhang. 1992. Search costs and prices. Econom. Lett. 38 55-60.
70. Scholten, P. A., A. Smith. 2002. Price dispersion then and now: Evidence from retail and e-tail markets. Advances in Microeconomics: Economics of the Internet and e-Commerce. Elsevier Science, Oxford UK, 11, 63-88.
71. Scott-Morton, F. 1997. The interaction between a most-favoredcustomer clause and price dispersion: An empirical examination of the Medicaid rebate rules of 1990. J. Econom. Management Strategy 6(1) 151-174.
72. Scott-Morton, F., F. Zettelmeyer, J. Silva-Risso. 2001. Internet car retailing. J. Indust. Econom. 49(4) 501-519.
73. Sin, R., R. Chellappa, S. Siddarth. 2007. Strategic implementation of "everyday low price" in electronic markets: A study of airline pricing on the Internet. Working paper, Social Science Research, New York.
74. Smith, M. 2001. The law of one price? Price dispersion and parallel pricing in Internet markets. Working paper, Carnegie Mellon University, Pittsburgh.
75. Smith, M., E. Brynjolfsson. 2001. Consumer decision-making at an Internet shopbot: Brand still matters. J. Indust. Econom. 49 541-558.
76. Smith, M., J. Bailey, E. Brynjolfsson. 2000. Understanding digital markets: Review and assessment. E. Brynjolfsson, B. Kahin, eds. Understanding the Digital Economy. MIT Press, Cambridge, MA.
77. Sorensen, A. T. 2000. Equilibrium price dispersion in retail market for prescription drugs. J. Political Econom. 108(4) 833-850.
78. Stigler, G., J. Kindahl. 1970. The Behavior of Industrial Prices. Columbia University Press, New York.
79. Tirole, J. 1988. The Theory of Industrial Organization. MIT Press, Cambridge, MA.
80. Varian, H. R. 1980. A model of sales. Amer. Econom. Rev. 70 651-659.
81. Venkatesan, R., K. Mehta, R. Bapna. 2007. Do market characteristics impact the influence of retailer characteristics on online prices? J. Retailing 83(3) 309-324.
82. Walsh, P. R., C. Whelan. 1999. Modeling price dispersion as an outcome of competition in the Irish grocery market. J. Indust. Econom. 47 325-343.
83. Webster, F. E. 1991. Industrial Marketing Strategy, 3rd ed. Wiley, New York.
84. Wilson, D. 1999. Organizational Marketing. International Thompson, London.