Search and Product Differentiation at an Internet Shopbot
Price dispersion among commodity goods is typically attributed to consumer search costs. We explore the magnitude of consumer search costs using a data set obtained from a major Internet shopbot. For the median consumer, the benefits to searching lower screens are $2.24 while the cost of an exhausti...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | en_US |
| Published: |
2004
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| Subjects: | |
| Online Access: | http://hdl.handle.net/1721.1/5046 |
| _version_ | 1811091867403550720 |
|---|---|
| author | Brynjolfsson, Erik Dick, Astrid Andrea Smith, Michael D. |
| author_facet | Brynjolfsson, Erik Dick, Astrid Andrea Smith, Michael D. |
| author_sort | Brynjolfsson, Erik |
| collection | MIT |
| description | Price dispersion among commodity goods is typically attributed to consumer search costs. We explore the magnitude of consumer search costs using a data set obtained from a major Internet shopbot. For the median consumer, the benefits to searching lower screens are $2.24 while the cost of an exhaustive search of the offers is a maximum of $2.03. Interestingly, in our setting, consumers who search more intensively are less price sensitive than other consumers, reflecting their increased weight on retailer differentiation in delivery time and reliability. Our results demonstrate that even in this
nearly-perfect market, substantial price dispersion can exist in equilibrium from consumers preferences over both price and
non-price attributes |
| first_indexed | 2024-09-23T15:09:17Z |
| format | Working Paper |
| id | mit-1721.1/5046 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T15:09:17Z |
| publishDate | 2004 |
| record_format | dspace |
| spelling | mit-1721.1/50462019-04-11T09:45:30Z Search and Product Differentiation at an Internet Shopbot Brynjolfsson, Erik Dick, Astrid Andrea Smith, Michael D. search costs shopbot product differentiation random coefficients choice model Price dispersion among commodity goods is typically attributed to consumer search costs. We explore the magnitude of consumer search costs using a data set obtained from a major Internet shopbot. For the median consumer, the benefits to searching lower screens are $2.24 while the cost of an exhaustive search of the offers is a maximum of $2.03. Interestingly, in our setting, consumers who search more intensively are less price sensitive than other consumers, reflecting their increased weight on retailer differentiation in delivery time and reliability. Our results demonstrate that even in this nearly-perfect market, substantial price dispersion can exist in equilibrium from consumers preferences over both price and non-price attributes 2004-03-05T19:24:30Z 2004-03-05T19:24:30Z 2004-03-05T19:24:30Z Working Paper http://hdl.handle.net/1721.1/5046 en_US MIT Sloan School of Management Working Paper;4441-03 Center for eBusiness at MIT;194 358313 bytes application/pdf application/pdf |
| spellingShingle | search costs shopbot product differentiation random coefficients choice model Brynjolfsson, Erik Dick, Astrid Andrea Smith, Michael D. Search and Product Differentiation at an Internet Shopbot |
| title | Search and Product Differentiation at an Internet Shopbot |
| title_full | Search and Product Differentiation at an Internet Shopbot |
| title_fullStr | Search and Product Differentiation at an Internet Shopbot |
| title_full_unstemmed | Search and Product Differentiation at an Internet Shopbot |
| title_short | Search and Product Differentiation at an Internet Shopbot |
| title_sort | search and product differentiation at an internet shopbot |
| topic | search costs shopbot product differentiation random coefficients choice model |
| url | http://hdl.handle.net/1721.1/5046 |
| work_keys_str_mv | AT brynjolfssonerik searchandproductdifferentiationataninternetshopbot AT dickastridandrea searchandproductdifferentiationataninternetshopbot AT smithmichaeld searchandproductdifferentiationataninternetshopbot |