pricing on the internet

Michael R. Baye and John Morgan
From The New Palgrave Dictionary of Economics, Online Edition, 2013
Edited by Steven  N. Durlauf and Lawrence E. Blume
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Abstract

While many conjectured that the information-rich and frictionless nature of online markets would result in marginal cost pricing, this has proved not to be the case. Price dispersion online is ubiquitous. The main reason is that price discovery occurs through platforms that have an incentive to ensure that prices are dispersed so that information is valuable. We survey models of platform pricing and trace the impact of their decisions downstream to e-retailers. Finally, we highlight the connection between empirical findings and theory predictions for e-retail pricing.
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How to cite this article

Baye, Michael R. and John Morgan. "pricing on the internet." The New Palgrave Dictionary of Economics. Online Edition. Eds. Steven   N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2013. The New Palgrave Dictionary of Economics Online. Palgrave Macmillan. 29 May 2017 <http://www.dictionaryofeconomics.com/article?id=pde2013_P000379> doi:10.1057/9780230226203.3895

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