Abstract

http://ssrn.com/abstract=255362
 
 

References (12)



 
 

Citations (16)



 


 



Free Riding and Sales Strategies for the Internet


Dennis W. Carlton


University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Judith A. Chevalier


Yale School of Management; National Bureau of Economic Research (NBER)

January 2001

NBER Working Paper No. w8067

Abstract:     
We examine manufacturers' decisions of whether and how to offer their products for sale over the internet. Manufacturers that rely on promotion of their products by brick and mortar retailers must consider the possibility that internet retailers can free ride off of that promotional effort. This creates an incentive for manufacturers to limit the availability of their products over the internet and to control the pricing of their products over the internet. We examine three categories of products: fragrances, DVD players, and side by side refrigerators. Our evidence suggests that manufacturers that limit distribution in the physical world also use various mechanisms to limit distribution online. In particular, we find evidence that these manufacturers attempt to prevent the sale of their products by online retailers who sell goods at deep discounts. Furthermore, we show that manufacturers who distribute their goods directly through manufacturer websites tend to charge very high prices for the products, consistent with the hypothesis that manufacturers internalize free rider issues. While our main focus is on free riding, our evidence on pricing practices is germane to the growing literature on price dispersion on the internet.

Number of Pages in PDF File: 35

working papers series


Download This Paper

Date posted: January 5, 2001  

Suggested Citation

Carlton , Dennis W. and Chevalier, Judith A., Free Riding and Sales Strategies for the Internet (January 2001). NBER Working Paper No. w8067. Available at SSRN: http://ssrn.com/abstract=255362

Contact Information

Dennis W. Carlton (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
312-322-0215 (Phone)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Judith A. Chevalier
Yale School of Management ( email )
135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Feedback to SSRN


Paper statistics
Abstract Views: 2,519
Downloads: 81
Download Rank: 178,482
References:  12
Citations:  16

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo6 in 0.266 seconds