On the Efficiency of Internet Markets for Consumer Goods

University of Maryland Department of Marketing Working Paper

42 Pages Posted: 2 Jan 2003

See all articles by Brian T. Ratchford

Brian T. Ratchford

University of Texas at Dallas

Xing Pan

Independent

Venkatesh Shankar

Texas A&M University - Department of Marketing

Date Written: August 2000

Abstract

Despite claims that electronic commerce lowers search costs dramatically, and therefore makes it easy for consumers to spot the best buy, empirical studies have found a substantial degree of price dispersion in electronic markets for consumer goods. This study investigates the consumer welfare implications of observed price levels and price dispersion in electronic markets. We examine the consumer welfare implications of changes in the structure of electronic commerce markets employing comprehensive data sets on e-tailer prices and services collected from BizRate.com in November 2000 and 2001. We find that price dispersion decreased substantially between these two periods, and that measured differences in e-tailer services bear little relation to e-tailer prices.

Keywords: Price Level, Price Dispersion, Internet Marketing, E-Commerce, Public Policy

Suggested Citation

Ratchford, Brian T. and Pan, Xing and Shankar, Venkatesh, On the Efficiency of Internet Markets for Consumer Goods (August 2000). University of Maryland Department of Marketing Working Paper, Available at SSRN: https://ssrn.com/abstract=328800 or http://dx.doi.org/10.2139/ssrn.328800

Brian T. Ratchford (Contact Author)

University of Texas at Dallas ( email )

2601 North Floyd Road
Richardson, TX 75083
United States

Xing Pan

Independent

Venkatesh Shankar

Texas A&M University - Department of Marketing ( email )

430 Wehner
College Station, TX 77843-4218
United States

HOME PAGE: http://www.venkyshankar.com

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