Some implications of search and switching costs for the price dynamics of electronic markets

Pedro Pereira

International Journal of the Economics of Business, 2004, vol. 11, issue 3, pages 303-327

Abstract: This article develops a model, based on switching costs and technological uncertainty, which explains some aspects of the price dynamics of e-commerce. Switching costs and intertemporal cost correlation lock-in consumers. Firms initially charge low prices to build a customer base. If firms fail to reduce costs, and reservation prices are low, firms exit the industry. Over time, prices increase if no exit occurs, and decrease if exit occurs. Prices may also decrease over time, if the proportion of low search cost consumers increases.

Keywords: E-Commerce; Search; Switching Costs; Learning; Industry Evolution; JEL Classification: D43; D83; L11; L13; L81; O31; O33 (search for similar items in EconPapers)
Date: 2004
View list of references

Downloads: (external link)
http://taylorandfrancis.metapress.com/link.asp?tar ... &id=W03F8G75VK4NRAJU (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:taf:ijecbs:v:11:y:2004:i:3:p:303-327

Ordering information: This journal article can be ordered from
http://www.tandf.co.uk/journals/subscription.html

Access Statistics for this article

International Journal of the Economics of Business is edited by Eleanor Morgan and H.E. Frech

More articles in International Journal of the Economics of Business from Taylor and Francis Journals
Series data maintained by Christopher F. Baum ().