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Clicks, Discontinuities, and Firm Demand Online

Michael Baye, J. Rupert J. Gatti, Paul Kattuman and John Morgan

Journal of Economics & Management Strategy, 2009, vol. 18, issue 4, 935-975

Abstract: We exploit a unique dataset from a price comparison site to estimate the determinants of clicks received by online retailers. We find that a firm enjoys a 60% jump in its clicks when it offers the lowest price at the site, and failure to account for discontinuities distorts parameter estimates by nearly 100%. This discontinuity is consistent with a variety of models that have been used to rationalize online price dispersion. Finally, we show that one may use estimates of the determinants of a firm's clicks to obtain bounds on its underlying demand parameters, including standard elasticities of demand.

Date: 2009
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https://doi.org/10.1111/j.1530-9134.2009.00234.x

Related works:
Working Paper: Clicks, Discontinuities, and Firm Demand Online (2006) Downloads
Working Paper: Clicks, Discontinuities, and Firm Demand Online (2006) Downloads
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