Search, Obfuscation, and Price Elasticities on the Internet

Glenn Ellison () and Sara Fisher Ellison

No 10570, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We examine the competition between a group of Internet retailers that operate in an environment where a price search engine plays a dominant role. We show that for some products in this environment, the easy price search makes demand tremendously price-sensitive. Retailers, though, engage in obfuscation---practices that frustrate consumer search or make it less damaging to firms---resulting in much less price sensitivity on other products. We discuss several models of obfuscation and examine its effects on demand and markups empirically. Observed markups are adequate to allow efficient online retailers to survive.

JEL-codes: L8 D4 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mic and nep-net
Date: 2004-06
Note: IO
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Journal Article: Search, Obfuscation, and Price Elasticities on the Internet (2009)
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