Title: What is behind price dispersion in e-markets?

Authors: Punit Ahluwalia

Addresses: College of Business Administration, University of Texas-Pan American, 1201 West University Drive, Edinburg, TX 78539, USA

Abstract: E-markets are more efficient than conventional markets because of better informed consumers, and trivial search and menu costs. Many studies have examined the reasons for price dispersion in retailer differentiated e-markets. This study takes a distinct approach and studies the relationships between the information tools generally available to consumers on e-retailers' websites and price dispersion over a period of time. Consumer reviews, their ratings and brand image are examined as the information sources. The analysis is based on six months retail data extracted from a major e-retailer in the USA. This study also explores the relationship between pricing strategy and the consumer comfort index reported weekly by Bloomberg. The implications for standards and evaluation metrics of e-retail websites are discussed.

Keywords: e-markets; electronic markets; e-retailers; electronic retailers; e-tailing; price dispersion; website standards; network externality; information cascades; retail websites; consumer reviews; consumer ratings; brand image; USA; United States; pricing strategy; consumer comfort index.

DOI: 10.1504/IJSS.2011.045054

International Journal of Services and Standards, 2011 Vol.7 No.3/4, pp.291 - 309

Published online: 20 Jan 2012 *

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