Pricing in a market without apparent horizontal differentiation: Evidence from web hosting services

Michael Thompson and Steve Thompson

Economics of Innovation and New Technology, 2006, vol. 15, issue 7, 649-663

Abstract: This article explores pricing in a product lacking the conventional attributes of horizontal differentiation—physical location, design, color, etc.—and whose vertical characteristics are precisely specified and capable of rapid imitation. Web hosting exhibits low entry barriers, high turnover and low concentration. We use an electronically collected database covering over 17,500 US and UK product offerings, and find that after controlling for quality reputation and e-visibility characteristics exert a strong positive impact on price. This result from a heterogeneous B2B market, without horizontal differentiation, complements homogeneous B2C research elsewhere in suggesting that price disparities persist, even in ultra-competitive e-markets.

Keywords: Horizontal differentiation; Web hosting; Hedonic pricing (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (3)

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DOI: 10.1080/10438590500418968

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