Price Dispersion on the Internet: A Review and Directions for Future Research

The impact of a new online channel: An empirical study

“…Furthermore, we find that, after the adoption, the price dispersion increases for room nights sold through both intermediaries and direct channels, and the price dispersion increase is higher for room nights sold by intermediaries. Our finding based on transaction prices supports the literature that shows that the Internet will not necessarily reduce the price dispersion using posted prices (Ancarani & Shankar, 2004;Brynjolfsson & Smith, 2000;Clemons, Hann, & Hitt, 2002;Pan et al, 2004). This finding is contrary to the near-zero price dispersion on the Internet found in a recent study conducted by Ghose and Yao (2011) using transaction prices for physical goods (e.g., hand tools, hardware, and office supplies) in business to business markets.…”

“…Therefore, consumers become more diverse in terms of search behavior and price information obtained after the adoption of a direct online channel. Therefore, we expect price dispersion increases in both direct and indirect channels (Burdett & Judd, 1983;Pan et al, 2004;Salop & Stiglitz, 1977) after the adoption of direct online channel. Furthermore, as travel agents have better capability to offer consumers customized prices based on consumer needs, we expect a higher increase in price dispersion in indirect channels.…”

“…Our empirical study analyzes a large dataset containing approximately 290 thousand hotel room transactions covering the periods both before and after the adoption of a direct online channel. In addition to objective and unbiased information provided by the transaction data (Ghose & Yao, 2011;Pan, Ratchford, & Shankar, 2004), our data have other advantages that enable us to conduct a thorough investigation of the impact of a direct online channel. First, our data contain rich customer information such as travel purposes, room quality preferences, and channel preferences, which allow us to identify how the impact varies across consumer segments and product markets.…”

“…Unlike prior research that studies the effects of adding an online channel on consumers and firms (Alba et al, 1997;Ansari et al, 2008;Avery, Steenburgh, Deighton, & Caravella, 2012;Bakos, 1997;Geyskens et al, 2002;Ghose & Yao, 2011;Guo, Ling, Dong, & Liang, 2013;Kushwaha & Shankar, 2013;Lal & Sarvary, 1999;Pan et al, 2004), our study investigates the impact on existing distribution channels when a firm adopts a direct online channel by examining the changes of intermediaries' competitive advantages after the adoption. The term ''competitive advantage'' has been defined in the literature as the advantage a firm obtains through acquiring resources and capabilities that allow it to perform better than its competitors (Chaharbaghi & Lynch, 1999).…”

Ownership, location and prices in chinese electronic commerce markets

“…1 Bailey (1998) and Clay et al (2002) find that prices in United States (US) e-commerce markets are at least as high as those in physical markets, while Brynjolfsson and Smith (2000), Clemons et al (2002) and Pan et al (2002aPan et al ( , 2004) find greater price 0167-6245/$ -see front matter Ó 2008 Elsevier B.V. All rights reserved. doi: 10.1016/j.infoecopol.2008.02.001 Between 2000 and 2002, the number of e-tailers increased from 1047 to 3804.…”