Title: Search costs in electronic markets: market equilibrium and corporation strategy

Authors: Jian Chen, Yingxia Lin

Addresses: Research Center for Contemporary Management, School of Economics and Management, Tsinghua University, Beijing, 100084, China. Research Center for Contemporary Management, School of Economics and Management, Tsinghua University, Beijing, 100084, China

Abstract: In this paper, a model is built to analyse the influences of search costs on market equilibrium. According to the results of a simulation, we conclude that the equilibrium prices of e-markets are not always lower than those of conventional markets, especially under certain combinations of return costs and search costs. In addition, some managerial insights are derived from the simulation results, e.g. that information technology doesn|t always create intensive price competition. Companies can soften competition in many ways in the e-market, such as differentiating themselves on the basis of search costs.

Keywords: search cost; e-market; conventional market; market equilibrium.

DOI: 10.1504/IJEB.2003.002167

International Journal of Electronic Business, 2003 Vol.1 No.1, pp.83-93

Published online: 21 Jul 2003 *

Full-text access for editors Access for subscribers Purchase this article Comment on this article