Journal article
The Effect of Stock Market Dynamics on Internet Price Competition
Journal of service research : JSR, Vol.6(1), pp.24-36
08/2003
DOI: 10.1177/1094670503254272
Abstract
The authors' model of Internet pricing competition shows how differences in switching costs, increasing returns to scale, and discount rates between pure and hybrid e-tailers affected their choice of pricing objective. During the run-up of Internet stocks, differences in these determinants motivated pure e-tailers to build their customer base, whereas hybrid e-tailers leveraged their relationship with existing (offline) customers. In the resulting two-tiered pricing structure, pure e-tailers offered substantially lower prices than hybrid e-tailers. The dot.com crash of April 2000 increased the discount rate for pure e-tailers. Using a longitudinal database of printer prices, the authors' model correctly predicts changes in overall price dispersion and the direction and magnitude of price changes for pure and hybrid e-tailers associated with this change in the financial markets. This study illustrates how changes in financial markets can affect pricing competition among Internet retailers in a single category.
Details
- Title: Subtitle
- The Effect of Stock Market Dynamics on Internet Price Competition
- Creators
- Yong Cao - University of Alaska AnchorageThomas S. Gruca - University of Iowa
- Resource Type
- Journal article
- Publication Details
- Journal of service research : JSR, Vol.6(1), pp.24-36
- DOI
- 10.1177/1094670503254272
- ISSN
- 1094-6705
- eISSN
- 1552-7379
- Language
- English
- Date published
- 08/2003
- Academic Unit
- Marketing
- Record Identifier
- 9984380531302771
Metrics
3 Record Views