Information rules: a strategic guide to the network economy
Information rules: a strategic guide to the network economy
Frictionless Commerce? A Comparison of Internet and Conventional Retailers
Management Science
Mixed Models: Theory and Applications (Wiley Series in Probability and Statistics)
Mixed Models: Theory and Applications (Wiley Series in Probability and Statistics)
International Journal of Electronic Commerce
Price competition in e-tailing under service and recognition differentiation
Electronic Commerce Research and Applications
Tabulated decision aids and airfare pricing
Electronic Commerce Research and Applications
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The existence and persistence of price dispersion for identical products in online markets have been well-documented in the literature. Possible explanations of this price dispersion, derived mainly using hedonic price models, have seen only modest success. In this paper, we propose a competitive model based on online retailers' differentiation mainly in service provided and recognition enjoyed to explain price dispersion. Our exploratory empirical analyses, using cross-sectional data, demonstrate that the competitive model provides a better explanation of the association between prices and online retailers' service and recognition levels. In addition, our competitive model is able to explain observations that are seemingly inconsistent with the hedonic model such as the negative association between service and price. This paper contributes to the literature on price dispersion by offering a differentiation model that provides a good fit with data and by proposing a theory that explains previous counterintuitive observations of prices. Our model also helps an e-tailer to choose a desirable position in the competitive market.