An Empirical Study of Price Dispersion in Homogenous Goods Markets

Thierry Warin and Daniel B. Leiter

Middlebury College Working Paper Series from Middlebury College, Department of Economics

Abstract: This paper presents the results of an empirical study of price dispersion in homogeneous goods markets. Modern economic theory suggests that inevitable asymmetries of information in markets lead to an equilibrium in which price dispersion is present even when goods are perfectly homogenous. In this paper we present an empirical analysis in which we employ both cross-sectional and time-series data gathered directly from Pricegrabber.com, one of the most popular and comprehensive online shopping/price-comparison sites on the Internet. In particular our analysis focuses on (i) the effect that the number of firms offering a good has on price dispersion, (ii) the informational value to the consumer of using the Pricegrabber website, and (iii) the persistency of price dispersion over time.

Keywords: E-commerce; Internet marketing; Price dispersion; Signaling; Search Cost; Gatekeepers; Regression and other statistical techniques JEL Classification: L81; L86; L11 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2007-09
New Economics Papers: this item is included in nep-com, nep-mic and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:mdl:mdlpap:0710

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