Price Setting in Online Markets: Does IT Click?

Yuriy Gorodnichenko, Viacheslav Sheremirov and Oleksandr Talavera ()

No 20819, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Using a unique dataset of daily U.S. and U.K. price listings and the associated number of clicks for precisely defined goods from a major shopping platform, we shed new light on how prices are set in online markets, which have a number of special properties such as low search costs, low costs of monitoring competitors' prices, and low costs of nominal price adjustment. We document that although online prices are more flexible than offline prices, they continue to exhibit relatively long spells of fixed prices, large size and low synchronization of price changes, considerable cross-sectional dispersion, and low sensitivity to predictable or unanticipated changes in demand conditions. Qualitatively these patterns are similar to those observed for offline prices, which calls for more research on the sources of price rigidities and dispersion.

JEL-codes: E3 (search for similar items in EconPapers)
Date: 2014-12
New Economics Papers: this item is included in nep-com, nep-mac and nep-mkt
Note: EFG IFM ME
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Citations: View citations in EconPapers (45)

Published as Yuriy Gorodnichenko & Viacheslav Sheremirov & Oleksandr Talavera, 2018. "Price Setting in Online Markets: Does IT Click?," Journal of the European Economic Association, vol 16(6), pages 1764-1811.

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Related works:
Journal Article: Price Setting in Online Markets: Does IT Click? (2018)
Working Paper: Price setting in online markets: does IT click? (2015)
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