Online Shopping Intermediaries: The Strategic Design of Search Environments

Anthony Dukes () and Lin Liu ()
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Lin Liu: University of Central Florida, Orlando, Florida 32816

Management Science, 2016, vol. 62, issue 4, 1064-1077

Abstract: An online shopping intermediary is an Internet platform on which consumers and third-party sellers transact. Shopping intermediaries provide a search environment (e.g., search aids) to lower the search costs incurred by consumers when finding and evaluating sellers’ products. We study strategic incentives of an intermediary in the design of its search environment as a means to ease search costs. An important aspect of our analysis is that consumers optimally decide how many sellers to evaluate and how deeply (e.g., number of attributes) to evaluate each of them. We find that the equilibrium search environment embeds sufficiently high search costs to prevent consumers from evaluating too many sellers, but not too high to cause them to evaluate sellers’ products at partial depth. This paper was accepted by J. Miguel Villas-Boas, marketing .

Keywords: pricing; competitive strategy; Internet marketing; online shopping intermediaries (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

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