Electronic Commerce, Consumer Search and Retailing Cost Reduction

Details Electronic Commerce, Consumer Search and Retailing Cost Reduction Electronic Commerce, Consumer Search and Retailing Cost Reduction

2001-10-02

arxiv.org/abs/cs/0110006v1

Computer Science

Human-Computer Interaction

29th TPRC Conference, 2001

Scientific paper

This paper explains four 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. Fourth, why established firms can, but need not, be more reluctant than newly created firm to adopt e-commerce. For this purpose we develop a model where e-commerce reduces consumers' search costs, involves trade-offs for consumers, and reduces retailing costs.

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