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On the evolution of monopoly pricing in Internet-assisted search markets

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García-Gallego, A. , Georgantzis, N., Jaramillo-Gutiérrez, A., Pereira, P. and Pernias-Cerrillo, J. C. (2014) On the evolution of monopoly pricing in Internet-assisted search markets. Journal of Business Research, 67 (5). pp. 795-801. ISSN 0148-2963

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To link to this item DOI: 10.1016/j.jbusres.2013.11.047

Abstract/Summary

This study examines the evolution of prices in markets with Internet price-comparison search engines. The empirical study analyzes laboratory data of prices available to informed consumers, for two industry sizes and two conditions on the sample (complete and incomplete). Distributions are typically bimodal. One of the two modes of distribution, corresponding to monopoly pricing, tends to attract such pricing strategies increasingly over time. The second one, corresponding to interior pricing, follows a decreasing trend. Monopoly pricing can serve as a means of insurance against more competitive (but riskier) behavior. In fact, experimental subjects who initially earn low profits due to interior pricing are more likely to switch to monopoly pricing than subjects who experience good returns from the start.

Item Type:Article
Refereed:Yes
Divisions:Faculty of Life Sciences > School of Agriculture, Policy and Development > Economic and Social Sciences Division > Agricultural and Food Investigational Team (AFIT)
ID Code:35713
Publisher:Elsevier

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