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Effects of consumer online purchase costs on online and traditional retailers
by Ruiliang Yan, John Wang
International Journal of Business and Systems Research (IJBSR), Vol. 3, No. 3, 2009
Abstract: Our research provides a useful framework to help business marketers identify the effect of consumer online purchase costs on firm performances in online and traditional channel competition. A game theory model is developed to determine the optimal strategies for online and traditional retailers. We demonstrate that consumer online purchase costs always have a valuable impact on firm profits, and further show that consumer online purchase costs always have a much more valuable impact on firm profits whenever the traditional retail transaction costs and the product web-fit change. We also find that consumer online purchase costs have a greater impact on the retailer's profits in a Stackelberg competitive system than in a Bertrand competitive system. Based on our results, managerial implications are discussed and probable paths of future research are identified.
Online publication date: Wed, 27-May-2009
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