Abstract
The authors' model of Internet pricing competition shows how differences in switching costs, increasing returns to scale, and discount rates between pure and hybrid e-tailers affected their choice of pricing objective. During the run-up of Internet stocks, differences in these determinants motivated pure e-tailers to build their customer base, whereas hybrid e-tailers leveraged their relationship with existing (offline) customers. In the resulting two-tiered pricing structure, pure e-tailers offered substantially lower prices than hybrid e-tailers. The dot.com crash of April 2000 increased the discount rate for pure e-tailers. Using a longitudinal database of printer prices, the authors' model correctly predicts changes in overall price dispersion and the direction and magnitude of price changes for pure and hybrid e-tailers associated with this change in the financial markets. This study illustrates how changes in financial markets can affect pricing competition among Internet retailers in a single category.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
