In-Store Referrals on the Internet

Cai, Gangshu (George) and Ying-Ju Chen

Journal of Retailing, 2011, vol. 87, issue 4, 563-578

Abstract: In the contemporary e-business, a retailer may display the links to the competing retailers directly (direct referral), or display the referral link provided by a third-party advertising agency (third-party referral), and these referrals may be either one-way or two-way. In this paper, we show that the referrals may align the retailers’ incentives and facilitate implicit collusion, and one-way referral may result in a mutually beneficial situation, thereby providing an economic rationale for these seemingly puzzling phenomena. Using third-party referrals may enhance the retailers’ collusion despite the potential disutility and revenue leakage, and referral services may be detrimental for the consumer welfare.

Keywords: Retailer referral; Third-party referral; Channel competition; Game theory (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jouret:v:87:y:2011:i:4:p:563-578

DOI: 10.1016/j.jretai.2011.09.005

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