Price Setting in Online Markets: Does IT Click?

Gorodnichenko, Yuriy; Sheremirov, Viacheslav; Talavera, Oleksandr

doi:10.3386/w20819

Cited by 33 publications

(30 citation statements)

References 40 publications

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“…A separate branch of the literature uses online prices from "shopbots," or price comparison websites, which are easier to collect. Examples include Brynjolfsson and Smith (2001) ;Brynjolfsson, Dick, and Smith (2009) ;Ellison and Ellison (2009a, b); Lunnemann and Wintr (2011);Gorodnichenko, Sheremirov, and Talavera (2014);and Gorodnichenko and Talavera (2017). Although these papers do not directly compare prices with offline data, their results suggest that online prices change more frequently and with smaller sizes than comparable findings in papers with offline CPI prices.…”

contrasting

confidence: 45%

Are Online and Offline Prices Similar? Evidence from Large Multi-Channel Retailers

Cavallo

2017

American Economic Review

265

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Online prices are increasingly used for measurement and research applications, yet little is known about their relation to prices collected offline, where most retail transactions take place. I conduct the first large-scale comparison of prices simultaneously collected from the websites and physical stores of 56 large multi-channel retailers in 10 countries. I find that price levels are identical about 72 percent of the time. Price changes are not synchronized but have similar frequencies and average sizes. These results have implications for national statistical offices, researchers using online data, and anyone interested in the effect of the Internet on retail prices. (JEL D22, L11, L81, O14)

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contrasting

confidence: 45%

Are Online and Offline Prices Similar? Evidence from Large Multi-Channel Retailers

Cavallo

2017

American Economic Review

265

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“…This …nding, not shown before in the literature, is coined by the authors as relative price dispersion. A similar feature was found by Gorodnichenko et al (2015) for stores selling multiple goods in online markets.…”

supporting

confidence: 48%

Price Dispersion When Stores Sell Multiple Goods

Trachter¹

2017

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S earch frictions are a prominent departure from the standard style of model we tend to write, which relies on frictionless Walrasian markets. They are not only prominent because they help us construct interesting models where policy can play a particularly important role, but also because search frictions are relatively easy to measure in the data. A large fraction of the literature on search frictions dwells with models of product markets where, for one reason or another, customers face a cost to act in the market (i.e., pay a search or switching cost to switch stores, pay a cost to learn a set of prices, etc.). A well-known result in a large class of models (based on the seminal work of Burdett and Judd [1983]) is that price dispersion for identical goods arises in equilibrium.The empirical evidence on price dispersion for product marketsa good measure of the extent of the friction, as there should be no price dispersion for homogeneous goods in a Walrasian market -is large, mostly documenting dispersion for particular goods in retail markets. The literature abstracts from several important features of retail markets. One of these features is that most stores sell multiple goods, a feature that not only changes the measurement of search frictions, but also opens new avenues for theoretical research, given the scant availability of models of multiproduct pricing, i.e., models where …rms price multiple goods simultaneously. In this paper, I review the work of Kaplan et al. (2016) (KMRT from now on), which is a recent study on the empirical properties of price dispersion in a multiproduct setting and provides a model to rationalize it.The views expressed in this article are those of the author and do not necessarily represent those of the Federal Reserve Bank of Richmond or the Federal Reserve System.

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“…It is only one of the examples of usage of the web-scraping techniques, which are getting attention as the new approach to analyse behaviour of prices. Lünnemann and Wintr (2011), and Gorodnichenko, Sheremirov, and Talavera (2014) find that on-line prices tend to be more flexible and have smaller price changes than the off-line prices. However current research was mainly focused on the price dynamics and their patterns.…”

Section: Literature Reviewmentioning

confidence: 99%

What Drives Price Dispersion in the European E-commerce Industry?

Gyódi

Sobolewski

Ziembiński

2017

Central European Economic Journal

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An important aspect of economic integration of the European Union is price convergence on digital single market. In this study, we propose a novel way to measure price dispersion in the e-commerce industry, using a custom made web-scraping tool. We target all the major price comparisons sites in the 26 EU member states, which enables us to collect price signals from thousands of retail shops operating on-line. We analyse pricing data of 182 branded products sold on-line across the EU, representing the most popular categories: fashion, consumer electronics, gaming and software, and cosmetics. We find considerable dispersion of both pre and post-vat on-line prices ranging from 20% to 40%, depending on the product category. The observed on-line price dispersion is driven by both cost factors and the level of per capita income, which is consistent with the view that producers or large distributors might engage in strategic price discrimination induced by income heterogeneity.At first look, our results point to the unexplored potential for cross-border trade, which could be released by policy interventions with regards to delivery, payment or law harmonization. However, under strategic price discrimination, reduced costs of arbitrage for consumers might induce discriminating firms to lower the magnitude of price dispersion between high and low income countries, bringing adverse welfare changes of a priori unknown net effect.

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Price Setting in Online Markets: Does IT Click?

Cited by 33 publications

References 40 publications

Are Online and Offline Prices Similar? Evidence from Large Multi-Channel Retailers

Are Online and Offline Prices Similar? Evidence from Large Multi-Channel Retailers

Price Dispersion When Stores Sell Multiple Goods

What Drives Price Dispersion in the European E-commerce Industry?

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