Online Shopping Intermediaries: The Strategic Design of Search Environments

Management Science, Forthcoming

34 Pages Posted: 27 Mar 2015 Last revised: 25 Jun 2016

See all articles by Anthony J. Dukes

Anthony J. Dukes

University of Southern California - Marshall School of Business

Lin Liu

University of Central Florida

Date Written: February 2, 2015

Abstract

An online shopping intermediary is an internet platform on which consumers and third-party sellers transact. Shopping intermediaries provide a search environment (e.g., search aids) to lower consumers’ search costs incurred when finding and evaluating sellers’ products. We study strategic incentives of an intermediary in the design of its search environment as a means to ease search costs. An important aspect of our analysis is that consumers optimally decide how many sellers to evaluate and how deeply (e.g., number of attributes) to evaluate each of them. We find that the equilibrium search environment embeds sufficiently high search costs to prevent consumers from evaluating too many sellers, but not too high to cause them to evaluate sellers’ products at partial depth.

Keywords: Search Platforms, Search Environment, Partial Search

Suggested Citation

Dukes, Anthony J. and Liu, Lin, Online Shopping Intermediaries: The Strategic Design of Search Environments (February 2, 2015). Management Science, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2576479

Anthony J. Dukes (Contact Author)

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA 90089
United States
213-740-3846 (Phone)

HOME PAGE: http://sites.usc.edu/anthonydukes/

Lin Liu

University of Central Florida ( email )

4000 Central Florida Blvd
Orlando, FL 32816-1400
United States

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