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Effects of Internet Market and Merchant Characteristics on Product Retail PriceYen, Kuo-jui 10 August 2008 (has links)
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.
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