Economics at your fingertips  

Some Implications of Search Costs for the Price Dynamics of Electronic Markets

Pedro Pereira

No 2, Working Papers from Portuguese Competition Authority

Abstract: This paper develops a model based on switching costs and technological uncertainty, which explains some aspects of the price dynamics of e-commerce. Switching costs and intertemporal cost correlation lock-in consumers. Firms initially charge low prices to build a customer base. If firms fail to reduce costs, and reservations prices are low, firms exit the industry. Over time, prices increase if no exit occurs, and decrease if exit occurs. Prices may also decrease over time, if the proportion of low search cost consumers increases.

Keywords: E-Commerce; Search; Switching Costs; Learning; Industry Evolution (search for similar items in EconPapers)
JEL-codes: D43 D83 L11 L13 L81 O31 O33 (search for similar items in EconPapers)
Date: 2004-05
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link) First version, 2004 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 NOT FOUND

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:

Access Statistics for this paper

More papers in Working Papers from Portuguese Competition Authority Contact information at EDIRC.
Bibliographic data for series maintained by Duarte Brito ().

Page updated 2019-04-14
Handle: RePEc:pca:wpaper:02