Reducing buyer search costs: implications for electronic marketplaces
Management Science - Special issue: Frontier research on information systems and economics
The invisible hand of the internet: product information and economics of ecommerce
The invisible hand of the internet: product information and economics of ecommerce
Consumer Learning, Brand Loyalty, and Competition
Marketing Science
Using Online Conversations to Study Word-of-Mouth Communication
Marketing Science
Promotional Chat on the Internet
Marketing Science
When Online Reviews Meet Hyperdifferentiation: A Study of the Craft Beer Industry
Journal of Management Information Systems
Electronic Commerce Research and Applications
Monetizing the Internet: Surely There Must be Something other than Advertising
HICSS '09 Proceedings of the 42nd Hawaii International Conference on System Sciences
Do Vendors’ Pricing Decisions Fully Reflect Information in Online Reviews?
ACM Transactions on Management Information Systems (TMIS)
How Iranian SMEs managers' perceive the electronic pricing process?
International Journal of Electronic Finance
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This paper examines how information provided by online reviews influences firms' pricing strategy for repeat purchase products. It is commonly understood that online reviews can reduce consumer uncertainty about product characteristics and, therefore, have the potential to increase product demand and firm profits. However, when considering repeat purchase products, online reviews have an additional effect in that they can alter consumers' propensity to switch among products, which can intensify price competition and lead to lower profits. The strength of these potentially offsetting effects depends on the informativeness of consumer reviews, which is a function of both objective review accuracy and the ability of consumers to obtain information from reviews when their idiosyncratic preferences over product characteristics might differ from the preferences of reviewers. The interplay of these competing effects results in an S-shaped relationship between the quality of reviews and firm profits. There exists an optimal level of consumer informedness from the firms' perspective, and competing firms may have incentives to facilitate consumer reviews in some markets but not in others. Given firms' strategic pricing, consumers may also be worse off as review informativeness increases.