We examine the competition between a group of Internet retailers who operate in an environment wh... more We examine the competition between a group of Internet retailers who operate in an environment where a price search engine plays a dominant role. We show that for some products in this environment, the easy price search makes demand tremendously pricesensitive. Retailers, though, engage in obfuscation - practices that frustrate consumer search or make it less damaging to firms - resulting in much less price sensitivity on some other products. We discuss several models of obfuscation and examine its effects on demand and markups empirically.
Abstract: We study competition among a score of firms participating in an online market for a com... more Abstract: We study competition among a score of firms participating in an online market for a commodity-type memory module. Firms were able to adjust prices continuously; prices de-termined how the firms were ranked and listed (lowest price listed first), with better ranks contributing to firms ' sales. Using a year's worth of hourly data, we document the pricing dy-namics, cycles, and other patterns in this market. We then characterize empirically the factors which drive price changes, noting clear evidence of firm heterogeneity in the choice of pricing strategy. Finally, we develop a framework for simulating counterfactual market settings, using the simulations to examine counterfactuals involving different mixes of firms according to pricing strategies.
Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, availab... more Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at.
Using data on wholesale prices for antibiotics sold to U.S. drugstores, we test the growing theor... more Using data on wholesale prices for antibiotics sold to U.S. drugstores, we test the growing theoretical literature on ‘countervailing power ’ (a term for the ability of large buyers to extract discounts from suppliers). Large drugstores receive a modest discount for antibiotics produced by competing suppliers but no discount for antibiotics produced by monopolists. These findings support theories suggesting that supplier competition is a prerequisite for countervailing power. As further evidence for the importance of supplier competition, we find that hospitals receive substantial discounts relative to drugstores, attributed to hospitals ’ greater ability to induce supplier competition through restrictive formularies. I.
JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, a... more JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms
We examine the competition between a group of Internet retailers who operate in an environment wh... more We examine the competition between a group of Internet retailers who operate in an environment where a price search engine plays a dominant role. We show that for some products in this environment, the easy price search makes demand tremendously pricesensitive. Retailers, though, engage in obfuscation - practices that frustrate consumer search or make it less damaging to firms - resulting in much less price sensitivity on some other products. We discuss several models of obfuscation and examine its effects on demand and markups empirically.
Abstract: We study competition among a score of firms participating in an online market for a com... more Abstract: We study competition among a score of firms participating in an online market for a commodity-type memory module. Firms were able to adjust prices continuously; prices de-termined how the firms were ranked and listed (lowest price listed first), with better ranks contributing to firms ' sales. Using a year's worth of hourly data, we document the pricing dy-namics, cycles, and other patterns in this market. We then characterize empirically the factors which drive price changes, noting clear evidence of firm heterogeneity in the choice of pricing strategy. Finally, we develop a framework for simulating counterfactual market settings, using the simulations to examine counterfactuals involving different mixes of firms according to pricing strategies.
Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, availab... more Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at.
Using data on wholesale prices for antibiotics sold to U.S. drugstores, we test the growing theor... more Using data on wholesale prices for antibiotics sold to U.S. drugstores, we test the growing theoretical literature on ‘countervailing power ’ (a term for the ability of large buyers to extract discounts from suppliers). Large drugstores receive a modest discount for antibiotics produced by competing suppliers but no discount for antibiotics produced by monopolists. These findings support theories suggesting that supplier competition is a prerequisite for countervailing power. As further evidence for the importance of supplier competition, we find that hospitals receive substantial discounts relative to drugstores, attributed to hospitals ’ greater ability to induce supplier competition through restrictive formularies. I.
JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, a... more JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms
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