Who Wins When Price Information is More Ubiquitous? An Experiment To Assess How Infomediaries Influence Price
Document Type
Article
Publication Date
8-2009
Publication Source
Electronic Markets
Abstract
Internet retailers often make use of price search services (infomediaries) that have the effect of reducing consumer search and expanding seller market presence. Research on price and advertising suggests that this may not be a profitable strategy. We develop an experimental posted-offer market to estimate the impact of infomediaries on price of homogenous goods. We analyze panel data from a range of market conditions that address how infomediaries services affect both seller-level offered price as well as market-level transacted price. We find that, while sellers attempt to extract higher prices through a higher initial offer price when using an infomediary, they fail to successfully collect it; transacted prices remain largely unchanged. As a consequence the benefits of infomediaries fall primarily to the buyer who faces largely unchanged transacted prices, and substantially reduced search costs. Search costs are, in essence shifted to the seller. Sellers who participate in this sort of price comparison should be aware that they are following a high-volume/low profit per unit strategy.
Inclusive pages
151-162
ISBN/ISSN
1019-6781
Copyright
Copyright © 2009, Institute of Information Management
Publisher
Springer
Volume
19
Issue
2
Peer Reviewed
yes
eCommons Citation
Gorman, Michael F.; Salisbury, William David; and Brannon, Ike, "Who Wins When Price Information is More Ubiquitous? An Experiment To Assess How Infomediaries Influence Price" (2009). MIS/OM/DS Faculty Publications. 73.
https://ecommons.udayton.edu/mis_fac_pub/73
COinS
Comments
Permission documentation is on file.