Internet Shopping Agents: Virtual Co-Location and Competition

Ganesh Iyer () and Amit Pazgal ()
Additional contact information
Ganesh Iyer: Haas School of Business, University of California at Berkeley, Berkeley, California 94720-1900
Amit Pazgal: John M.Olin School of Business, Washington University, St.Louis, Missouri 63130-4899

Marketing Science, 2003, vol. 22, issue 1, 85-106

Abstract: Internet Shopping Agents (ISAs) allow consumers to costlessly search many online retailers and buy at the lowest price. One would expect these ISAs to subject sellers to intense price competition that results in uniform low prices. Yet, Internet retailers have joined these ISAs. Furthermore, the prices charged by inside retailers can vary substantially. We examine the impact of ISAs on market competition. An ISA creates differentiation in the pricing strategies of ex-ante identical retailers: Some retailers join the ISA due to mass of consumers that they can potentially win, while others stay out and extract surplus from their loyal consumers, while others stay our and extract surplus from their loyal consumers. The equilibrium inside pricing is such that the average price charged can increase or decrease when more retailers join, depending on whether or not the reach of the ISA is independent of the number of joining retailers. When the reach is endogenous, there exist a unique number of inside retailers.

Keywords: consumer search; comparison shopping; shopping agents; internet intermediaries; internet retailing; game theory; electronic commerce (search for similar items in EconPapers)
Date: 2003
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (63)

Downloads: (external link)
http://dx.doi.org/10.1287/mksc.22.1.85.12842 (application/pdf)

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: https://EconPapers.repec.org/RePEc:inm:ormksc:v:22:y:2003:i:1:p:85-106

Access Statistics for this article

More articles in Marketing Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().