Referral Infomediaries

Yuxin Chen, Ganesh Iyer () and V. Padmanabhan ()
Additional contact information
Ganesh Iyer: Haas School of Business, University of California, Berkeley, California 94720–1900
V. Padmanabhan: Olin School of Business, Washington University, St. Louis, Missouri 63130–4899

Marketing Science, 2002, vol. 21, issue 4, 412-434

Abstract: An interesting phenomenon has been the emergence of “infomediaries” in the form of Internet referral services in many markets. These services offer consumers the opportunity to get price quotes from enrolled brick-and-mortar retailers and direct consumer traffic to particular retailers who join them. This paper analyzes the effect of referral infomediaries on retail markets and examines the contractual arrangements that they should use in selling their services. We identify the conditions necessary for the infomediary to exist and explain how they would evolve with the growth of the Internet. The role of an infomediary as a price discrimination mechanism leads to lower online prices. Perhaps the most interesting result is that the referral infomediary can unravel (i.e., no retailer can get any net profit gain from joining) when its reach becomes too large. The analysis also shows why referral infomediaries would prefer to offer geographical exclusivity to joining retailers.

Keywords: Referral Services; Infomediaries; Intermediaries; Internet; Price Discrimination; Retail Competition; Exclusive Contracts (search for similar items in EconPapers)
Date: 2002
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormksc:v:21:y:2002:i:4:p:412-434

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