Beyond the Hype of Frictionless Markets: Evidence of Heterogeneity in Price Rigidity on the Internet
Journal of Management Information Systems
International Journal of Electronic Commerce
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Price rigidity in firms, industries and the economy as a whole is a topic of long-standing interest among scholars of many disciplines such as economics and marketing. Today, however, information technology is increasingly changing the process by which strategic pricing decisions in firms are made and implemented in business operations. This creates the impetus for developing a more substantial managerial understanding of firm pricing processes in the presence of information technology. In the 1990s, technology-driven pricing was largely the domain of the airlines, hotels and rental car companies -- with the practice of revenue yield management. However, now it is possible for bricks-and-clicks firms, and even traditional retailers, to implement systems that permit significant adjustments to be made to prices in situations where menu costs previously made rapid price changes difficult to achieve in an economical way. The paper draws upon theoretical perspectives that are largely new to the field of Information Systems, but that offer rich opportunities for theory-building and empirical research in settings that will be of high interdisciplinary interest.