"Electronic commerce, consumer search and retailing cost reduction "

  1. Mazón Calpena, Cristina
  2. Pereira, Pedro
Journal:
Documentos de trabajo. Economic series ( Universidad Carlos III. Departamento de Economía )

Year of publication: 2001

Issue: 67

Type: Working paper

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Abstract

This paper explains three things in a unified way. First, how e-commerce can generate price equilibria, where physical shops either compete with virtual shops for consumers with Internet access, or alternatively, sell only to consumers with no Internet access. Second, how these price equilibria might involve price dispersion on-line. Third, why prices may be higher on-line. For this purpose we develop a model where e-commerce: reduces consumers¿ search costs, involves tradeoffs for consumers, and reduces retailing costs.

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