<p>Vi vill med denna uppsats undersöka vilka faktorer som styr prisspridningen på den svenska e-handelsmarknaden. De faktorer som studerats är produktens pris, popularitet, bransch, antal säljare och i vilken period som materialet samlats in. Undersökningen kom fram till resultatet att samtliga faktorer, förutom perioden för datainsamling, är statistiskt säkerställda på ett eller flera av våra prisspridningsmått. Det innebär att fyra av de fem faktorer som vi studerat påverkar prisspridningen.</p>

Vi vill med denna uppsats undersöka vilka faktorer som styr prisspridningen på den svenska e-handelsmarknaden. De faktorer som studerats är produktens pris, popularitet, bransch, antal säljare och i vilken period som materialet samlats in. Undersökningen kom fram till resultatet att samtliga faktorer, förutom perioden för datainsamling, är statistiskt säkerställda på ett eller flera av våra prisspridningsmått. Det innebär att fyra av de fem faktorer som vi studerat påverkar prisspridningen.

A central result in price theory is the law of one price: prices of a homogeneous good sold at different locations should be equal. Empirical studies of the law of one price find that it is often violated. In my dissertation I explore the allocation problem that suppliers face when supplying multiple markets. I use the experimental method to examine the effect of an increase in the number of suppliers in a market, ceteris paribus, has on the allocation decisions of market participants. I also use the experimental method to investigate suppliers that are strategic and show that market concentration and transportation costs restrict the supplier’s ability to coordinate on an efficient equilibrium. A strategic supplier takes account his own effect on prices. Strategic supplies face a difficult strategy coordination problem. If they cannot solve it, then an inefficient outcome may result. Coordination failure may result in price dispersion across the markets. Resulting price signals do not inform suppliers who should respond and by how much. Price signals are not sufficient for suppliers to solve the strategy coordination problem. In the experiments, I observe that increasing the quantity of suppliers, that is the Herfindahl index of concentration, in the market will decrease the frequency of the equilibrium strategy to be played, holding other things constant. Increasing the number of firms in a market, ceteris paribus, increases price dispersion and coordination on an efficient market allocation is decreased. The experiments reveal that the ability of suppliers to coordinate is directly correlated with the optimization premium: the expected payoff difference between best responding to an opponents strategy and the payoff to an inferior response. The incentive is greater to best respond when the optimization premium is larger. Coordination at the equilibrium allocation is quicker.

The advent of the internet has revolutionized the way people buy and sell. The internet is characterized by increased access to information. This increased information should foster convergence to the “law of one price,” for homogenous goods. The surge of electronic markets has motivated a stream of research focusing on comparing the efficiency of the internet market to the traditional one. This dissertation contributes to the existing literature of consumer search behavior in electronic markets and its effects on the price level and dispersion in the market more generally. A part of this dissertation assesses the direct and indirect effect of increased internet usage on the prices of airline tickets, using a unique contemporaneous online and offline transaction data for airline tickets, covering the final quarter of 2004. The study also investigates the relationship between increased internet usage and price dispersion in the market for airline tickets. This study also includes an exhaustive set of controls for airline ticket characteristics, namely refundability, advance purchase requirements, travel and stay restrictions, class of travel, departure and return day of the week and time, flight level load factor along with other market structure data used in the standard airlines literature. The existing theoretical literature in consumer search extended to the electronic markets assumes, for simplicity, that all consumers in the internet markets are the “searchers,” looking for the lowest price. The internet, however, also plays the role of a convenient shopping medium for a group of consumers whose primary motivation is not to search for the lowest price. The contemporary literature incorrectly categorizes these consumers as the traditional searchers. The remaining part of this dissertation provides a modification to the existing theoretical models of consumer search to accommodate both searchers and non-searchers in each of the electronic and traditional markets and derive the implications of the increased internet usage on the average level of prices and price dispersion in a market selling a homogenous good.

The advent of the internet has revolutionized the way people buy and sell. The internet is characterized by increased access to information. This increased information should foster convergence to the “law of one price,” for homogenous goods. The surge of electronic markets has motivated a stream of research focusing on comparing the efficiency of the internet market to the traditional one. This dissertation contributes to the existing literature of consumer search behavior in electronic markets and its effects on the price level and dispersion in the market more generally. A part of this dissertation assesses the direct and indirect effect of increased internet usage on the prices of airline tickets, using a unique contemporaneous online and offline transaction data for airline tickets, covering the final quarter of 2004. The study also investigates the relationship between increased internet usage and price dispersion in the market for airline tickets. This study also includes an exhaustive set of controls for airline ticket characteristics, namely refundability, advance purchase requirements, travel and stay restrictions, class of travel, departure and return day of the week and time, flight level load factor along with other market structure data used in the standard airlines literature. The existing theoretical literature in consumer search extended to the electronic markets assumes, for simplicity, that all consumers in the internet markets are the “searchers,” looking for the lowest price. The internet, however, also plays the role of a convenient shopping medium for a group of consumers whose primary motivation is not to search for the lowest price. The contemporary literature incorrectly categorizes these consumers as the traditional searchers. The remaining part of this dissertation provides a modification to the existing theoretical models of consumer search to accommodate both searchers and non-searchers in each of the electronic and traditional markets and derive the implications of the increased internet usage on the average level of prices and price dispersion in a market selling a homogenous good.

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Despite expectations in the late 1990s that the Internet would lead to frictionless commerce, empirical research shows that electronic commerce is characterized by persistent price dispersion. This paper examines reasons why online price dispersion exists in the books, CDs, and consumer electronics retail sectors. The Internet allows for multi-channel retailing, and it influences supply, demand, and market-related factors for both retailers and consumers. These factors shape retailers’ price-setting abilities which, in turn, shape their pricing strategies. I find that different pricing strategies result in online price dispersion, and I ultimately predict that retail e-commerce markets, which are oligopolistic in nature, will continue to exhibit persistent price dispersion. In particular, price dispersion will decrease the most in the CDs sector, followed by the books and then the consumer electronics sectors.

Demand uncertainty has been recognized as one factor that may cause price dispersion in perfectly competitive markets with costly and perishable capacity. With the persistence of the degree of price dispersion in increasingly competitive markets, demand uncertainty has become more important for us to understand the phenomenon of fare inequality. This dissertation consists of three related studies on this topic. In the first study, Prescott (1975) model is extends by incorporating the heterogeneity of customers' reservation values. The model shows that the equilibrium price dispersion also depends on the mix of customers and their reservation values. With customer segmentation based on reservation values, the equilibrium price dispersion is more efficient than what can be achieved without segmentation. In the airline industry context, the model implies that different prices can exist simultaneously in the market and carriers would provide more seats if they can segment their travelers. This sheds light on an alternative motivation for airlines to require Saturday night stay over other than the practice of price discrimination. In the second study, a price simulation in the airline industry is conducted. The stochastic demand for coach class, nonstop, air travel service on the observed routs is calculated. Then a market price schedule based on Prescott's model is simulated by using nonparametric method. The comparison between the simulated price distribution and the actual price distribution provides evidence that on average more than 60 percent of the fare inequality on the observed routes can be accounted for by cost variation due to demand uncertainty under the condition of perfect competition. At last, an empirical model is specified to explore the relationship between route demand uncertainty and carrier price dispersion in U.S. air travel markets. The results demonstrate that the effect of route demand uncertainty on carrier price dispersion varies with the market structure. In monopoly market, the route demand uncertainty has no effect on carrier price dispersion. While in duopoly and competitive markets, the increase of route demand uncertainty is associated with the decrease of the carrier price dispersion. Furthermore, the negative relationship is magnified when the market becomes more competitive.

Usually, consumers will collect market information about the product before they decide to buy it or not. In other words, the market information is a critical factor to affect consumers¡¦ purchasing intensions and behavior. Previous research points out that when consumers encounter a wider dispersion of price, they will expect to find cheaper stores. Besides, future price is often considered by consumers too. Kauffman et al. (2002) mentioned that the market price information might affect the recruiting of group buying. In a competitive market, if consumers are unable to perceive the utility of discounts provided by group-buying mechanism, they may shop at other retailers¡¦ stores. Further, because the final price of group buying will not be known until the transaction is closed, consumers¡¦ decisions might be up to their prediction about the final price. This study explores how price dispersion and price volatility affect consumers¡¦ internal reference price and expectation of final price of group buying. The difference between the internal reference and expectation of final price of group-buying indicates the consumers¡¦ transaction utility. How transaction utility affects consumers¡¦ intentions to join group buying is another issue being studied. In addition, if there is interference effect of consumers¡¦ risk attitude on final price forecast of group-buying, it¡¦s investigated, too. The result indicates that price dispersion has significant effects on consumers¡¦ all kinds of internal reference prices and predictions about the final price of group buying. However, the price volatility only has significant effects on consumers¡¦ perceived fair price, aspiration price, and reservation price. Neither significant effect of price volatility on consumers¡¦ price prediction of group buying nor interference effect of risk attitude is found. As expected, there is a significant positive causal relationship between transaction utility and intention to join group-buying. It shows that the transaction utility resulting from the comparison between the lowest market price and the most possible final price of group buying has the most explanatory power to predict consumers¡¦ participating intension to join group-buying.

This paper explores the effect of internet market and merchant characterics. Product retail price is not only a major revenue-driven factor for the seller, but also a key decision factor for the buyer. This research investigates how online retailing prices are affected by maket types and merchant characteristics. A dataset of 3,811 retail price quotes collected from 245 product items at 14 categoris from 880 onlline shopping or auction merchants is collected and analyzed. Major findings are below: 1. The average prices in the B2C market are significant higher than that in the C2C markets. No significant price difference is found between C2C markets that charge fees and free C2C markets. These implies that the auction market reduces product prices but whether the market maker charge service fees has no effect on product pricing. 2. Competitive intensity of a market is found to have significant positive effect on the price dispersion rate. This is consistent with prior research findings but is in conflict with the signle price theory in economics. This is because some vendors may intentionally lower their prices to attract customers, which results in a higher dispersion rate. 3. The reputation of a merchant has significant positive effects on its price dispersion in the B2C market. In auction markets, reputation has positive effect on price dispersion in the higher range, but has negative effect in the lower range. In both markets, merchant size has a positive effect on price dispersion in both markets. 4. Finally, price dispersion and effect of market types and product characteristics vary for different product categories.