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On the evolution of monopoly pricing in Internet-assisted search markets

Aurora García-Gallego (), Nikolaos Georgantzís (), Ainhoa Jaramillo-Gutiérrez, Pedro Pereira and J. Carlos Pernías-Cerrillo ()
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J. Carlos Pernías-Cerrillo: Economics Department, Universitat Jaume I, Castellón, Spain

No 2013/05, Working Papers from Economics Department, Universitat Jaume I, Castellón (Spain)

Abstract: We study the evolution of prices in markets assisted by price-comparison engines. We use laboratory data obtained under two industry sizes and two conditions concerning the sample (complete, incomplete) of prices available to informed consumers. Distributions are typically bimodal. One of the two modes, corresponding to monopoly prices, tends to increasingly attract prices over time. The second one, corresponding to interior prices, presents a decreasing trend. Monopoly pricing can be used as an insurance against more competitive (but riskier) behavior. In fact, subjects earning low profits due to interior pricing in the past are more likely to choose monopoly pricing.

Keywords: Internet Economics; price-comparison search engines; mixed strategy equilibria; experimental economics (search for similar items in EconPapers)
JEL-codes: D0 D2 L1 L4 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-exp and nep-ict
Date: 2013
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Journal Article: On the evolution of monopoly pricing in Internet-assisted search markets (2014) Downloads
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