Next Article in Journal
Mobile Payment: The Next Frontier of Payment Systems? - An Empirical Study Based on Push-Pull-Mooring Framework
Previous Article in Journal
Managing the Smiley Face Scale Used by Booking.com in an Ordinal Way
 
 
Search for Articles:
Title / Keyword
Author / Affiliation / Email
Journal
Article Type
 
 
Advanced Search
 
Section
Special Issue
Volume
Issue
Number
Page
 
Journals
JTAER
Volume 16
Issue 2
10.4067/S0718-18762021000200110
jtaer-logo
Submit to this Journal Review for this Journal Propose a Special Issue
► Article Menu

Article Menu

share Share announcement Help format_quote Cite question_answer Discuss in SciProfiles
Journal of Theoretical and Applied Electronic Commerce Research is published by MDPI from Volume 16 Issue 3 (2021). Previous articles were published by another publisher in Open Access under a CC-BY 3.0 licence, and they are hosted by MDPI on mdpi.com as a courtesy and upon agreement with Faculty of Engineering, University of Talca.
first_page
settings
Order Article Reprints
Font Type:
Arial Georgia Verdana
Font Size:
Aa Aa Aa
Line Spacing:
Column Width:
Background:
Article

Price Discount and Price Dispersion in Online Market: Do More Firms Still Lead to More Competition?

by
Wenche Wang
1,
Fan Li
2 and
Yujia Zhang
2
1
University of Michigan, School of Kinesiology, Ann Arbor, USA
2
Shenzhen University, China Center for Special Economic Zone Research, Shenzhen, China
J. Theor. Appl. Electron. Commer. Res. 2021, 16(2), 140-154; https://doi.org/10.4067/S0718-18762021000200110
Submission received: 2 December 2019 / Revised: 14 July 2020 / Accepted: 24 July 2020 / Published: 28 October 2020
Versions Notes

Abstract

Contrary to the traditional economic prediction that prices decrease as more firms enter the market, this paper finds a non-monotonic relationship between the number of firms and prices in online book markets. A substantial decrease in posted prices is observed when the market moves from a monopoly to duopoly. Surprisingly, as the market further expands, posted prices converge to monopoly price rather than competitive price. This is because as the number of sellers increase on the internet, the cost for consumers to obtain accurate information as well as the cost to evaluate products and sellers increase. Thus, the existence of a large number of sellers deter consumer search and lead to more random purchases. With little consumer search, sellers’ returns to undercutting price reduce. Therefore, instead of lowering price when faced with more competitors, sellers increase prices.
Keywords: competition; market structure; online market; pricing strategy; search competition; market structure; online market; pricing strategy; search

Share and Cite

MDPI and ACS Style

Wang, W.; Li, F.; Zhang, Y. Price Discount and Price Dispersion in Online Market: Do More Firms Still Lead to More Competition? J. Theor. Appl. Electron. Commer. Res. 2021, 16, 140-154. https://doi.org/10.4067/S0718-18762021000200110

AMA Style

Wang W, Li F, Zhang Y. Price Discount and Price Dispersion in Online Market: Do More Firms Still Lead to More Competition? Journal of Theoretical and Applied Electronic Commerce Research. 2021; 16(2):140-154. https://doi.org/10.4067/S0718-18762021000200110

Chicago/Turabian Style

Wang, Wenche, Fan Li, and Yujia Zhang. 2021. "Price Discount and Price Dispersion in Online Market: Do More Firms Still Lead to More Competition?" Journal of Theoretical and Applied Electronic Commerce Research 16, no. 2: 140-154. https://doi.org/10.4067/S0718-18762021000200110

APA Style

Wang, W., Li, F., & Zhang, Y. (2021). Price Discount and Price Dispersion in Online Market: Do More Firms Still Lead to More Competition? Journal of Theoretical and Applied Electronic Commerce Research, 16(2), 140-154. https://doi.org/10.4067/S0718-18762021000200110

Article Metrics

Back to TopTop