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An empirical comparison of market efficiency: Electronic marketplaces vs. traditional retail formats
Abstract
Researchers have found that price dispersion and market inefficiency exists in electronic marketplaces. Little attention has been bestowed to explore difference in market efficiency between traditional and electronic marketplaces. This study integrates both product and channel preference factors to analyze differences in market efficiency between electronic and traditional shopping environments. Data Envelopment Analysis (DEA) is applied to calculate market efficiency for single-channel and multi-channel shoppers. Results show that market efficiencies vary across consumer segments and products. In summary, this paper enhances understanding of market efficiency by incorporating behavioral segment and product characteristics into the explanatory framework.
... Shin (2007) indicates that consumers who did not purchase goods through an online channel behave in such a way because they cannot assess the actual quality of products while purchasing, remaining uncertain about the goods. Consumers tend to examine physical products at stores to reduce uncertainty (Jiang & Balasubramanian, 2014). In addition, numerous studies have indicated that tangibility is crucial in O2O marketing (Kacen et al., 2013;Levin et al., 2005;Yu, Niehm, & Russell, 2011). ...
... We then used a multinomial logit model to examine the relationships among the channel adoption factors, search channels, and purchase channels. In the offline channel, the results regarding media richness, tangibility, sales service quality, and online purchase risk supported our theoretical derivation (Jiang & Balasubramanian, 2014;Maity & Dass, 2014;Shin, 2007). Hence, O2O retailers must enhance sales of their products intelligently, enable e-consumers to access detailed product information, and improve services (e.g., quick return of goods) in the offline channel. ...
Due to the competitiveness of the e-commerce environment and the emerging usage of mobile devices, companies have found a new e-marketing strategy, that is, online-to-offline (O2O) marketing, to integrate both channels more efficiently. The rapid rise of the O2O market in recent years has changed the way people consume and become an important issue. However, there are still very few studies focusing on O2O marketing issues. Hence, the purpose of this study is to develop an analytic model to explore how consumers adopt O2O commerce models. In this study, we collect 1,267 samples of valid Taiwan-based internet users who intended to adopt multi-channel retailing, using a web survey of consumers through InsightXplorer's CyberPanel. We use EFA and CFA to confirm search factors (information availability, search convenience, enjoyment, media richness and tangibility) and purchase factors (service quality, price and promotion, purchase convenience, risk perception, immediacy and product quantity) in keeping with past research. We also conduct a multinomial logit model to analyze the relationships among search factors, purchase factors, and adopting multi-channel purchasing behavior. The results indicate that the main reason consumers choose to purchase through physical channels is that they could provide better sales service quality and have a lower shopping risk, however, if consumers care about prices and promotions, they tend to lean towards the Mobile path. At the close of this paper, in-depth discussions and conclusions are provided to inform further research and future practices.
... Jiang and Balasubramanian [11] argued that the market efficiency of traditional retail formats has been questioned in studies of the price-quality relationship. Both price efficiency and market efficiency were used to investigate the relationships between price and quality. ...
... Reports Survey Research Department, a team of highly trained social scientists, surveys millions of consumers each year using state-of-the-art techniques; collecting feedback on a broad range of real-world experiences with products, services) is open and credible. Therefore, most scholars use this Consumer Reports for marketing research [11]. Table 1 lists the definitions of the price and function characteristics from Consumer Reports. ...
This study applied mathematical programming approach to investigate the brand efficiency of smartphone brands by collecting data of 2013–2015 from Consumer Report . The brand efficiency was completed by employing the slack-based measure in data envelopment analysis. The degree of inefficiency of each brand was evaluated, and each brand’s metatechnology ratio was calculated using the metafrontier concept. The results revealed that the sampled smartphone brands reach the highest average brand efficiency in 2013, where Apple exhibited the highest brand efficiency among the sampled brands. The high brand efficiency in 2013 was attributed to the small number of product types at beginning of the growth period of smartphones. Finally, this study examined the efficiency of smartphone brands among four major telecommunications operators in the United States. It was found that Apple demonstrated the highest efficiency with all four operators, while no significant difference was noted among operators and smartphone brands.
... A digital marketplace refers to an online software platform that brings together buyers and sellers to facilitate the exchange of goods and services (Jiang & Balasubramanian, 2014). Over the past years, the popularity and use of digital marketplaces have exploded (Costa Melo et al., 2022), driven by the exponential rise of e-commerce and e-procurement solutions; and by the use of different types of technological and innovative solutions in everyday life (Shirzad & Bell, 2013). ...
The e-commerce and digital technologies growth, has led to the emergence of various electronic marketplaces having the ability to connect parties across geographical locations, thus offering convenience and flexibility. The European Union recognizes the prowess of digital marketplaces and for this reason, many EU-funded projects presented e-marketplaces in various sectors. For this reason, a Systematic Literature Review (SLR) is proposed to summarize recent studies in the field, providing a comprehensive overview of specific business and technical characteristics, and extracting valuable insights. From the SLR, 26 primary studies have been extracted during 2013–2023. The analysis highlighted that there are five marketplace types in terms of market offerings, catering to multiple sectors of economy. Moreover, the emergence of the blockchain technology has led to the development of decentralized marketplaces, offering greater security, and transparency. This trend is also reflected by the results alongside with some useful outcomes regarding implementation technologies, interoperability and deployment. Finally, the results highlighted that the exploitation of these marketplace is an open issue.
... Other studies in the e-commerce environment on average still focus on the consumer side, for example the factors that influence online purchasing decisions (Cheung, Lee and Thadani, 2009; Zhu, Zhang and Zhu, 2012; Rudansky-Kloppers, 2017; Khanna and Awal, 2019; Dermawan, Nasution and Sitepu, 2020). Research on E-Marketplaces has been conducted by Jiang & Balasubramanian (2014) to explore differences in market efficiency between traditional and electronic markets. Furthermore, Renna (2010) in her research proposes negotiation policies, customer tactics, and coalition tools, as added value services in the E-Marketplace. ...
Electronic marketplace (E-marketplace) provides a new paradigm for every business organization in managing its business, including food MSMEs. The dominance of the marketing function, which was originally just a marketing mix in traditional marketing, has turned into relationship marketing supported by e-marketing mix activities. This study aims to determine the effect of the e-marketing mix (product, price, place, promotion, people, process) on the marketing performance of food MSMEs through the e-marketplace. E-Marketplaces selected as sample areas were Tokopedia, Shopee, Bukalapak. Respondents who were sampled were MSMEs that sell snack products in the E-Marketplace with a total of 135 respondents. The analysis technique used in this research is Structural Equation Modeling (SEM). The total indicators measured in the model are 23 indicators. The results showed that among the six e-marketing mix variables, place and people variables had a significant effect on marketing performance. Therefore, to produce high marketing performance in e-marketplaces, food MSMEs can prioritize the implementation of “place” strategies, namely maintaining product stock, selecting the right keywords/search words, complete delivery and payment support, including the Cash on Delivery option for consumers, as well as “people” strategies such as responding quickly to customer inquiries, high concern for customer complaints, and personal selling.
... Research shows that there has been a noteworthy structural shift towards online and digital retailing in recent years (Jiang and Balasubramanian, 2014;Li and Tang, 2011;Walsh et al., 2010), resulting in assortment and overall satisfaction for repurchase. Satisfaction, a post purchase attitude towards an online retailer (Rezaei et al., 2014) is an important factor for business (Statista, 2015) and growth impetus for online retail sector (Qazi et al., 2017). ...
... All items are of the same sign, and all are significant. According to Diamantopoulos and Siguaw [53], Coltman, Devinney [54], Hair, Anderson [51] and Jiang and Balasubramanian [55] any variable that shares these empirical characteristics is a reflective variable. ...
After the authors of this study encounter a series of peculiar examples of products and services that are not normally sold online in Canada, the authors assess the psychometric properties of net-enablement capability, as an internal rather than external factor, regarding the decision to implement online selling tools as technology innovation to achieve growth. According to the literature, other authors rarely consider internal factors when they assess the relationship between technology adoption and business model innovation. The study contributes to the continuous dialogue involving the Net-Enabled Business Innovation Cycle (NEBIC) model by analyzing online sellers and offline sellers in Canadian sectors with below-average rates of online selling adoption. The findings indicate that net-enablement capability is a significant internal factor that positively affects innovation in business models for Canadian online sellers across different sectors regardless of the level of online selling adoption rate.
... Past evidence has shown that optimal management brings a set of benefits to firms. These include, for instance, increasing customer value through co-creation (Avery et al., 2012), as well as enhanced brand popularity (Jiang and Balasubramanian, 2014). Overall, as emphasized by the Marketing Science Institute (2018), how to properly manage customer brand relationships at both the individual and the group levels has become a topic of wide-spread interest. ...
While the proliferation of online channel has promoted consumerś active participation in the value-creation process, affecting the way consumers transact and interact with brands, this increased consumer empowerment also has its dark side. Drawing from social exchange theory, we aim to offer a unifying framework to understand the linkages between customer equity, experience quality and non-transactional behaviors (including co-creation and word-of-mouth) in an e-commerce context. We also suggest that relationship proneness moderates the established links. With the final valid sample for 761 online banking customers obtained via the survey in a European financial services company, we apply partial least squares and develop a multi-group analysis. Customer equity, as a global assessment of brand, is vital for the development of positive customer experience, which consequently promotes the enforcement of non-transactional behaviors. Finally, relationship proneness strengthens the impact of customer equity and customer experience quality. Implications for theory and management are discussed.
... Amerikoje kasmet augo po 15-25 proc. (Pingjun, Balasubramanian, 2014), tačiau nesustoja augti ir dabar bei kartu pagrindinius įmonių klientus transformuoja į internetinius pirkėjus. ...
[straipsnis ir santrauka lietuvių kalba; santrauka anglų kalba]
Įmonių, veikiančių globaliame, nuolat tobulėjančiame informacijos ir komunikacijos technologijų spartaus augimo, komunikacijos formų transformacijos, intelektiniu kapitalu ir žiniomis pagrįsto konkurencingumo laikmetyje, pardavimų metodų pa(si)rinkimas yra veiklos rezultatus, tarp jų – įmonių efektyvumą, bendradarbiavimą, rinkos dalies poziciją ir kitus rodiklius, lemianti pardavimo proceso dalis. Prieš priimant sprendimą dėl pardavimų metodo, kuriuo remiantis bus pasiekiamas galutinis vartotojas, pasirinkimo, prieš priimant sprendimą keisti pardavimų metodą ar po jo pakeitimo, įmonėms būtina atlikti detalų pardavimų metodo poveikio veiklos rezultatams vertinimą. Straipsnyje atskleidžiamas holistinis požiūris į sprendimų priėmimo dėl pardavimų metodų pa(si)rinkimo ar pakeitimo, pardavimų metodų ir daugiapjūvių rezultatų sąryšio vertinimą siekiant rinkos ir veiklos efektyvumo, rinkos ir vartotojų pasiekiamumo bei sėkmingos įmonės veiklos rinkoje. Atlikus sisteminę, lyginamąją mokslinės literatūros analizę, parengtas pardavimų galutiniam vartotojui metodų ir rezultatų sąryšio vertinimo teorinis modelis, skirtas įmonių pardavimų metodo (-ų) pasirinkimo sprendimams racionalizuoti.
... Amerikoje kasmet augo po 15-25 proc. (Pingjun, Balasubramanian, 2014), tačiau nesustoja augti ir dabar bei kartu pagrindinius įmonių klientus transformuoja į internetinius pirkėjus. ...
Companies are now operating in a globalized era, with constantly developing and rapidly growing information and communication technologies, with many transformations in communication forms and with intellectual capital- and knowledge-based competition aspects. Due to this, the choice of sales approaches is an essential part of the sales process, which determines the performance results, measured in terms of the efficiency of the companies, cooperation, market share, and other indicators. Before making decisions regarding the choice of the sales approach with which the end-user will be reached, or before making the decision to change the approach of sales, or after such a change, it is necessary for companies to assess the detailed impact thereof on their performance. This article high-lights a holistic approach to decision-making related to the importance of choosing or modifying sales approaches, the importance of assessing the relationship between sales approaches and multi-threaded results on the needs of the market and operational efficiency, on the need of better access to markets and consumers, and successful business activities. After a systematic comparative analysis of the scientific literature, the theoretical model, which allows for estimating the relationship between business results and sales approaches through which end-users are reached, was created. The model was designed to rationalize the choices available when choosing the sales approaches. The relationship between sales approaches and results highlights the need for estimating qualitative variables, such as consumers, because they directly determine the company’s quantitative performance by purchasing the product offered by the company. The theoretical model helps systematically see the whole complex assessment process and, in each case, depending on the purpose of the assessment, to choose the methods which will let achieve the best results of the evaluation, at the same time allowing the company an opportunity to choose the best selling approach that would meet their expectations. It is necessary to pay attention to the fact that evaluation is a continuous process, so after the results of the evaluation of the chosen sales approach are received, it is necessary to return to the decision-making process and evaluate if the originally set goal was reached.
Keywords: sales approaches, physical store, online store, single-channel vs. multi-channel sales, quantitative and qualitative evaluation criteria, financial indicators, consumer satisfaction, consumer loyalty.
... Setelah adanya revitalisasi pasar, diberlakukan peraturan zonasi yang mengubah letak berdagang para pedagang menjadi berdekatan, dan mengelompok sesuai dengan jenis dagangannya. Efisiensi pasar bervariasi sesuai dengan konsumen dan produknya (Jiang dan Siva, 2014). Peraturan zonasi ini justru dilanggar oleh beberapa pedagang yang dengan sengaja berjualan tidak sesuai dengan lokasi yang telah ditentukan. ...
Latar belakang penelitian ini bertujuan untuk melihat dampak revitalisasi pasar tradisional terhadap pendapatan pedagang di Pasar Bulu Semarang. Jenis penelitian ini adalah kualitatif dan kuantitatif. Data dikumpulkan melalui observasi, wawancara, dan dokumentasi. Teknik analisis data menggunakan model interaktif dan uji t sampel berpasangan. Hasil menunjukan bahwa mayoritas pedagang di Pasar Bulu merupakan penduduk asli Kota Semarang. Revitalisasi tidak mengubah hubungan sosial antar pedagang, maupun pedagang dengan aparat yang selama ini terjalin dengan baik. Setelah revitalisasi kondisi bangunan Pasar Bulu menjadi lebih bersih dan rapi. Revitalisasi berdampak pada penurunan pendapatan pedagang, dibuktikan dengan hasil uji t sampel berpasangan diperoleh hasil t_hitung= 10,116 > t_tabel= 2,064 dengan probabilitas 0,000 < 0,05. Rata-rata pendapatan pedagang sebelum revitalisasi sebesar Rp 5.280.000, sedangkan sesudah revitalisasi sebesar Rp 3.366.000. Kesimpulan dalam penelitian ini adalah revitalisasi berdampak pada penurunan pendapatan pedagang di Pasar Bulu Semarang. The basic problem of this study is to show the impact of the traditional market revitalization towards the traders income in Bulu Market Semarang. The type of this study are qualitative and quantitative. The data collected by observation, interview, and documentation. The analysis of data using interactive models and paired samples t test. The result showed that the majority of traders in Bulu Market are the natives of Semarang City. The revitalization did not change the social relations between the traders, and traders with the officers who had been well maintained. After the revitalization, the Bulu Market Building condition become more clean and neart. The revitalization gives an impact towards the decreasing of the traders income, proved by the paired samples t test result which showing t_hitung= 10,116 > t_tabel= 2,064 with probability 0,000 < 0,05. The average of the traders income before revitalization Rp 5.280.000, meanwhile after the revitalization Rp 3.366.000. the conclusion in this study is the revitalization gives an impact towards the decreasing of the traders income in Bulu Market Semarang
... The last decade has seen an exponential increased in commercial use (buying and selling) of Internet because of its convenience of ordering and paying for the products online and have then delivered to the doorstep. Between 2002 and 2012, retail e-commerce grew at 15-25% per year, following a fairly typical adoption pattern that transformed more mainstream consumers into online shoppers [1]. As one of the developing countries that experience the highest online population growth rates in China. ...
As the development of the internet, there are increasingly online shoppers around the world engaging in the e-commerce actives, and more people prefer to buy the large household appliances on line. However, there are few quantitative studies on the investigation of the main affecting factors of the desire to purchase the large household appliances online focused on the market in China, which is one of the developing countries with the highest online population growth. This paper is an attempt to identify the main factors affecting the online shopping of the large household appliances from the e-commerce websites in China, and Fisher’s exact test is applied to identify the main affecting factors of online shopping desire. The results could be the guideline for the e-commerce companies in terms of improving their sales of the large household appliances.
Küresel tedarik krizinin yaşandığı pandemi sonrası dönemde, ileri yönlü tedarik faaliyetlerinin sürdürülebilmesi için firmaların pazarlama maliyetlerinin finansal dönüşleri; karar vericiler, hissedarlar, yatırımcılar, müşteriler ve ekonomik çevre açısındanönem arz etmektedir. Bu önem doğrultusunda, çalışmanın amacı; imalat sektöründe faaliyet gösteren firmaların pazarlama maliyetlerinin finansal performansları üzerinde göreli etkinlik düzeylerinin incelenmesidir. İnceleme kapsamına; Borsa İstanbul’da tekstil sektöründe işlem gören ‘tekstil, giyim eşyası ve deri’ firmaları dahil edilmiştir. Firmaların pazarlama verileri Kamuyu Aydınlatma Platformu’ndan elde edilmiştir. Örnekleme dahil olan 25 firma vardır. Bu firmalar arasından 15 firmanın verileri eksiktir.Pazarlama verileri eksik olan firmalar değerlendirmeye alınmamış, verileri istenilen özelliklere sahip 10 firma analize dahil edilmiştir. Elde edilen veriler 2020 ve 2021 yıllarını kapsamaktadır. Girdi olarak alınan parametreler; personelgiderleri, seyahatgiderlerive nakliye giderleri iken çıktı parametreleri; net satışlar, faaliyet kârı ve dönem net kârı olarak belirlenmiştir. Veri Zarflama Analizi sonucunda 2020 ve 2021 yıllarında 4 firma tam etkinlik göstermiştir.Firmaların 2020 ile 2021 yıllarına ait finansal performansları kıyaslandığında ise üç firmanın performansının bir önceki yıla oranla düştüğü sonucuna ulaşılmıştır.
This chapter presents the overview of retail management; retail management and technology; the aspects of Electronic Retailing (e-tailing); e-tailing and Electronic Commerce (e-commerce); the perspectives on online consumer behavior; and the advanced issues of e-tailing in retail environments. Retail management focuses on the processes that go into ensuring consumers can obtain the products they want from their chosen retail store. Effective retail management helps company distributes the finished products created by the business to consumers in order to determine and satisfy what buyers want and require. E-tailing is a powerful marketing technique for the right product with the right message to the right person. The chapter argues that effective retail management and e-tailing applications generate business revenue, build brand awareness, and pave the way for broader distribution in retail environments.
Using fiction book transactions from Tmall.com, the largest online business-to-consumer (B2C) platform in China, this study comprehensively examines the significant factors that determine online transaction price dispersion rather than posted price dispersion both across stores (inter-store) and within stores over time (inter-temporal). We find large and persistent transaction price dispersion on the Internet, particularly across stores. Price dispersion arises because sellers actively engage in strategic pricing behaviors including loss-leader pricing and dynamic pricing. When consumers face a high risk of mismatched purchases on the Internet market, they place substantial weight on quality signaling factors rather than price when making purchase decisions.
Purpose
Due to recent technological advances, the retail industry has changed significantly. This paper examines a novel unmanned retail mode-unattended convenience store to identify the possible operational problems and develop appropriate managerial recommendations.
Design/methodology/approach
A data-driven two-stage epsilon-based measure (EBM) data envelopment analysis (DEA) method was developed to evaluate operational performance data from 33 unattended convenience stores and assess the impacts on efficiency of the internal factors, and a Tobit regression analysis was employed to examine the external environment.
Findings
It was found that the overall economic performances were relatively low and fluctuated significantly; however, the social performances were slightly higher. The out-of-stock rate was found to have a negative impact on efficiency, and regional characteristics were found to have significant effects on performance.
Practical implications
This study sought to identify current operational problems with unattended convenience stores to provide managerial insights. The cross-sectional assessment suggested that to achieve better performance, particular attention needed to be paid to store locations and surrounding store environments.
Originality/value
First, this paper establishes a novel theoretical framework to evaluate the economic and social operational performances at unattended convenience stores. Second, it contributes to research on unattended convenience stores and the unmanned retail industry and offers significant guidance on detecting operational deficiencies and improving future performances.
We consider the spatial competition between two traditional physical (or offline) retailers and an Internet (or online) retailer where the efficiency of the latter differs from that of the former. We assume that consumers are heterogeneous across two dimensions: (1) the costs of traveling to either of the offline retailers; and (2) the costs of purchasing from the online retailer. Both dimensions depend on the spatial location of consumers and are independent of each other. We show that the online retailer maximizes its profit at an intermediate level of the consumer disutility of online purchase when its efficiency is low.
Electronic commerce has changed traditional business trading behaviors, since consumers can easily consume through the Internet e-commerce platform. The Internet provides numerous products and services, but consumers find it is hard to choose their favorite ones. The consumer-to-business (C2B) is popular in recent years and it has become one of the best choices for customers forming a group to buy products. Thus, more and more consumers participate in online group buying. However, consumers anticipate to different prices when buying products and demand service. Thus, applying an intelligent agent into negotiation can effectively decrease efforts spent on collecting buyer information, transaction costs, and negotiation with sellers.
This study proposed a system that applies an intelligent agent into the C2B e-commerce process, and evaluates the system through an experiment. Additionally, a questionnaire is used to investigate the benefits of the proposed intelligent agent systems. Analytical results show that the proposed intelligent system can increase user satisfaction, reduce performance risk, and raise perceived fairness, but nothing help on perceived value. It implied that the system still needs efforts and time to promote in nowadays commerce. If people can understand its value from finding the information they need, it must grant the more perceived value. Additionally, this system is not only applicable to C2B, but it can extend to other e-commerce models, because the agent can help the negotiation between the sellers and buyers.
This study focuses on the technical efficiency analysis of Russian retail companies over the period 2011-2015. The main objective is to assess technical efficiency and to reveal factors that affect the efficiency and creditworthiness of this important sector of the Russian economy. Efficiency can be considered a basic measure of creditworthiness because it demonstrates management's ability to maximise its use of resources. Studying the results enables banks to consider creditworthiness and determine whether to provide retailers with funding for future development. The empirical analysis for this article was performed using Data Envelopment Analysis and Stochastic Frontier Analysis methods. Two differing methods can be used to evaluate technical efficiency. The first, SFA, presents a picture of the whole market and formulates general propositions on the creditworthiness of retail companies. The other method, DEA, looks at certain companies and their relative performance in comparison with their competitors. Banks can use a technical efficiency score to monitor the dynamics and potential of each company. In addition to examining tools for evaluating technical efficiency, the study also has practical implications for managers of retail companies in Russia.
This study focuses on the technical efficiency analysis of Russian retail companies over the period 2011–2015. The main objective is to assess technical efficiency and to reveal factors that affect the efficiency and creditworthiness of this important sector of the Russian economy. Efficiency can be considered a basic measure of creditworthiness because it demonstrates management’s ability to maximise its use of resources. Studying the results enables banks to consider creditworthiness and determine whether to provide retailers with funding for future development. The empirical analysis for this article was performed using Data Envelopment Analysis and Stochastic Frontier Analysis methods. Two differing methods can be used to evaluate technical efficiency. The first, SFA, presents a picture of the whole market and formulates general propositions on the creditworthiness of retail companies. The other method, DEA, looks at certain companies and their relative performance in comparison with their competitors. Banks can use a technical efficiency score to monitor the dynamics and potential of each company. In addition to examining tools for evaluating technical efficiency, the study also has practical implications for managers of retail companies in Russia.
Recent advances in technology have profoundly impacted the way firms interact and transact with current and prospective customers. The emergence of online channels has been of particular relevance, as it promotes consumers’ active participation in the value-creation process. In this study, we draw from the Stimulus-Organism-Response model to provide a theoretical understanding of the role played by two critical factors driving online customer-initiated contacts (OnCICs): social effects and perceived risk. Additionally, we establish a direct link between these interactions and customer profitability. We merge longitudinal objective data with subjective data for a sample of 1990 customers in financial services and apply partial least squares, revealing that social effects influence perceived risk. Perceived risk consequently promotes the development of OnCICs, while social effects reduce the need for such interactions. Finally, OnCICs help to promote high-quality relationships and leads to higher performance. Implications for theory and management are discussed.
Conventional segmentation efforts usually focus on verbal or behavioral data while ignoring visual cues, which play a significant role in impression management. Drawing on theoretical work regarding motivations for impression management (need to belong and need for self-promotion), we propose that Facebook users differ from each other in the composition of visual elements they portray in their Facebook profile photos (PPs), and thus can be segmented based on this composition. In this exploratory study we present a methodological proof of concept for the visual segmentation of Facebook users. Using a randomly selected international sample of 500 Facebook accounts, we analyze data implicit in PPs and identify visual cues relevant to virtual impression management. Using these cues we segment users into types, and relate the types to demographics, Facebook usage, and brand engagement as reflected in the Facebook profile. At the theoretical level, the findings suggest that the current accepted motivations for Facebook impression management (need to belong and need for self-promotion) should be expanded to include a third motivation, need for self-expression. At the practical level, the findings demonstrate the utility of visual segmentation, which can later be implemented using computerized systems.
Effective clearance of unused service capacity is an issue of importance for managers and practitioners in consumer service industries. Taking a design science research approach, this research-in-progress paper proposes an innovative electronic clearance marketplace (clearance e-marketplace) based on novel design principles, namely, shared bundle purchasing and shared customer pooling, which arguably leads to more effective results than traditional clearance methods. We explain the design and implementation of this Information System (IS) artifact and develop hypotheses arguing that consumer service providers' use of this proposed clearance e-marketplace in clearing their unused service capacity would lead to improved performance gains on new customer acquisition and percentage sales compared to their traditional self-managed clearance campaigns. Furthermore, we explain the details of an empirical study to evaluate the efficacy of the proposed clearance e-marketplace in achieving the said performance gains.
A análise da produtividade e eficiência é uma atividade importante no varejo. Desta forma, este estudo possui o objetivo de analisar o estado da arte dos trabalhos realizados na cadeia do varejo com a aplicação do modelo matemático Data Envelopment Analysis (DEA). Para isso, foram revisados conceitos sobre a DEA e o setor varejista. A pesquisa prática foi realizada por meio de buscas sistemáticas em bases de dados e análise bibliométrica. Dentre os resultados, observa-se os estados unidos como maior produtor de artigos referentes ao tema pesquisado, o ano de 2014 com o maior número de publicações e a principal área temática como sendo a de negócios e gestão. Essas dimensões de análise podem ser úteis para outros estudos que se propõe a construir o estado da arte em um tema referente ao desempenho de varejos.
The Internet has great potential as a medium to reach consumers but we stillneed to improve our understanding of the impact of IT on information asymmetriesgoverning buyer and seller positions. In this study we are primarily interestedin exploring differences in pricing strategies between physical and electronicmarkets, across product categories and over time, and to understand thereasons for these differences. Choosing a homogenous product - music compactdisks, we compare prices, price dispersion and price dynamics on the Internetwith brick-and-mortar retailers. We collected price information for 21 current hitsand 23 old-hits albums from top five nationally-known brick-and-mortarCD retailers and nine on-line stores, and repeated the data collection one yearlater. Overall, 905 data points, 572 from the Internet and 333 from brick-and-mortarretail shops were collected. We find that: 1) The Internet market continuesto show price dispersion despite the apparently near zero search costs forconsumers and the growth of market size; 2) Brick-and-mortar markets executemore consistent and dominant short-term discount strategies for current-hitalbums, and as a result, CD prices for old-hit albums are cheaper in the Internetmarket as was found in other studies, but CD prices for current-hit albums in thephysical markets are comparable to prices in the Internet market, and; 3) Pricedynamics alter over time with Internet retailers offering cheaper prices foralbums and apparently employing more frequent and finer price changes. Theresults suggest that it is important to look at dynamic price behavior and productportfolio issues when trying to characterize pricing strategy in this media. Wepropose that IT's role in segmenting customers to extract greater consumersurplus, as well as differences in consumer base and preferences and seller coststructures and differentiation strategies, need to be carefully examined to explainprice dispersion and dynamic price behavior.
This article analyzes the price dispersion for products observed on the Internet and reaffirms the existence of substantial price dispersion across e-tailers. Comparison of advertised vs. unadvertised products reveals that predictions of search theory on advertising effect are generally not confirmed in the Internet market. Comparison of multi-channel vs. pure-play e-tailers reveals that multi-channel retailers with established brands in physical stores command price premiums in most on-line markets but not in very competitive markets like books, CDs, and flight tickets. A model is developed that uses cross-site and in-site search as search cost variables, and range of product options, product description, and product demonstration as Web site service feature variables. It is used to test when search cost variables are more salient than service feature variables, and vice versa. The results show that whether a variable accounts for variance in prices differs from product to product. Some service features enable e-retailers to charge higher prices without losing competitiveness; others do not offer price advantage because they represent lower cost structures that allow e-tailers to charge lower prices to become more competitive.
The authors examine the implications of electronic shopping for consumers, retailers, and manufacturers. They assume that near-term technological developments will offer consumers unparalleled opportunities to locate and compare product offerings. They examine these advantages as a function of typical consumer goals and the types of products and services being sought and offer conclusions regarding consumer incentives and disincentives to purchase through interactive home shopping vis-a-vis traditional retail formats. The authors discuss implications for industry structure as they pertain to competition among retailers, competition among manufacturers, and retailer-manufacturer relationships.
Presents a summary and synthesis of the author's work on attribution theory concerning the mechanisms involved in the process of causal explanations. The attribution theory is related to studies of social perception, self-perception, and psychological epistemology. Two systematic statements of attribution theory are described, discussed, and illustrated with empirical data: the covariation and the configuration concepts. Some problems for attribution theory are considered, including the interplay between preconceptions and new information, simple vs. complex schemata, attribution of covariation among causes, and illusions in attributions. The role of attribution in decision making and behavior is discussed. (56 ref.) (PsycINFO Database Record (c) 2012 APA, all rights reserved)
Examined individual differences in intrinsic motivation to engage in effortful cognitive endeavors in 2 experiments involving 293 undergraduates. Results of Exp I indicate that Ss high in need for cognition were more likely to think about and elaborate cognitively on issue-relevant information when forming attitudes than were Ss low in need for cognition. Analyses further indicated that Ss low in need for cognition acted as cognitive misers rather than as verbal dolts. In Exp II, individual differences in need for cognition were used to test the prediction from the elaboration likelihood model that Ss who tend to engage in extensive issue-relevant thinking when formulating their position on an issue tend to exhibit stronger attitude–behavior correspondence. Results confirm this hypothesis: The attitudes of Ss high in need for cognition, which were obtained in a survey completed approximately 8 wks before the 1984 presidential election, were more predictive of behavioral intentions and reported voting behavior than were the attitudes of Ss low in need for cognition. (49 ref) (PsycINFO Database Record (c) 2012 APA, all rights reserved)
In Exp I, 183 undergraduates read a persuasive message from a likable or unlikable communicator who presented 6 or 2 arguments on 1 of 2 topics. High involvement (HI) Ss anticipated discussing the message topic at a future experimental session, whereas low-involvement (LI) Ss anticipated discussing a different topic. For HI Ss, opinion change was significantly greater given 6 arguments but was unaffected by communicator likability. For LI Ss, opinion change was significantly greater given a likable communicator but was unaffected by the argument's manipulation. In Exp II with 80 similar Ss, HI Ss showed slightly greater opinion change when exposed to 5 arguments from an unlikable (vs 1 argument from a likable) communicator, whereas LI Ss exhibited significantly greater persuasion in response to 1 argument from a likable (vs 5 arguments from an unlikable) communicator. Findings support the idea that HI leads message recipients to employ a systematic information processing strategy in which message-based cognitions mediate persuasion, whereas LI leads recipients to use a heuristic processing strategy in which simple decision rules mediate persuasion. Support was also obtained for the hypothesis that content- vs source-mediated opinion change would result in greater persistence. (37 ref) (PsycINFO Database Record (c) 2004 APA, all rights reserved)
In this paper, we develop hypotheses on how prices and price dispersion compare among three types of retailers, pure-play Internet, bricks-and-mortar (traditional), and bricks-and-clicks (multichannel) retailers and test them through an empirical analysis of data on the book and compact disc categories in Italy during 2002. Our results, based on an analysis of 13720 price quotes, show that when posted prices are considered, traditional retailers have the highest prices, followed by multichannel retailers and pure-play e-tailers, in that order. However, when shipping costs are included, multichannel retailers have the highest prices, followed by pure-play e-tailers and traditional retailers, in that order. With regard to price dispersion, pure-play e-tailers have the highest range of prices, but the lowest standard deviation. Multichannel retailers have the highest standard deviation in prices with or without shipping costs. These findings suggest that online markets offer opportunities for retailers to differentiate within and across the retailer types.
Intelligent agents have been applied to electronic commerce, promising a revolution in the way we conduct business, whether business-to-business, business-to-customer or customer-to-customer. This article gives a brief review of agent technologies involved in buying and selling, followed by lists of Internet e -commerce agents. Several agent-mediated electronic commerce systems are analysed in the context of a general model of the buying process. Several lists of related Internet links should help readers to gather additional relevant information. We presented an intelligent employment agent and e-commerce related agent modules in the system. Our experience indicates that new agent capabilities offer advanced functions in e-commerce.
Previous research has examined whether price dispersion exists in theoretically highly efficient Internet markets. However, much of the previous work has been focused on industries with low cost and undifferentiated products. In this paper, we examine the presence of price dispersion and product differentiation using data on the airline ticket offerings of online travel agents (OTAs). We find that different OTAs offer tickets with substantially different prices and characteristics when given the same customer request. Some of this variation appears to be due to product differentiation---different OTAs specialize by systematically offering different trade-offs between ticket price and ticket quality (minimizing the number of connections, matching requested departure and return time). However, even after accounting for differences in ticket quality, ticket prices vary by as much as 18% across OTAs. In addition, OTAs return tickets that are strictly inferior to the ticket offered by another OTA for the same request between 2.2% and 28% of the time. Overall, this suggests the presence of both price dispersion and product differentiation in the online travel market.
There have been many claims that the Internet represents a new nearly “frictionless market.” Our research empirically analyzes the characteristics of the Internet as a channel for two categories of homogeneous products—books and CDs. Using a data set of over 8,500 price observations collected over a period of 15 months, we compare pricing behavior at 41 Internet and conventional retail outlets.
We find that prices on the Internet are 9–16% lower than prices in conventional outlets, depending on whether taxes, shipping, and shopping costs are included in the price. Additionally, we find that Internet retailers' price adjustments over time are up to 100 times smaller than conventional retailers' price adjustments—presumably reflecting lower menu costs in Internet channels. We also find that levels of price dispersion depend importantly on the measures employed. When we compare the prices posted by different Internet retailers we find substantial dispersion. Internet retailer prices differ by an average of 33% for books and 25% for CDs. However, when we weight these prices by proxies for market share, we find dispersion is lower in Internet channels than in conventional channels, reflecting the dominance of certain heavily branded retailers.
We conclude that while there is lower friction in many dimensions of Internet competition, branding, awareness, and trust remain important sources of heterogeneity among Internet retailers.
Intelligent software agents that can perform tasks on the user's behalf independently of direct control of the user themselves, promise to evolutionize the way in which we use the Internet to conduct business. Research on how these agents will change the nature of Internet-based e-commerce and what its impact will be on consumers and businesses is only just beginning. To assess the impact of agent usage in a retail online shopping environment, an empirical study was conducted to determine what impact, if any, the use of Shopbots, a form of Internet agent, had on consumers looking to purchase a DVD player online via the World Wide Web [WWW]. Of particular interest was the Internet agent's impact on the user's task performance and task outcomes. These included the time spent on shopping activities, the shopper's confidence in their purchase decision, the quality of the purchase decision made by the shopper and the amount of cognitive effort required to select a product for purchase.
The rapid evolution of the Internet from a general information space to an electronic market space provides the users with the possibility to navigate among thousands of Web sites for comparing products and merchants, for making their purchases or for obtaining some desired services. However, from the user's viewpoint, such a navigation often requires an high cost in terms of time to spend on the Web to perform a satisfying comparison of the various alternatives. From the supplier's viewpoint, it is needed to propose products in a suitable way to customers, taking into account the typology of each customer, her/his preferences, habits, etc. In this context, generally denoted as Business-to-Customer (B2C) e-commerce, the use of software agents as mediators in e-commerce activities seems to be particularly promising. In this paper, we describe and analyze the various roles agents have assumed in B2C e-commerce applications. Furthermore, we propose a Consumer Buying Behaviour model, called E 2-CBB, that considers new emergent issues, as the capability to solve semantic heterogeneity, and the adaptive presentations of Web stores. By using such a model, we classify and compare a number of agent-based approaches for managing B2C e-commerce, proposed in the literature in the last ten years.
Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Electrical Engineering and Computer Science, 1998. Includes bibliographical references (p. [171]-180).
This paper presents a methodology to aggregate multidimensional research output. Using a tailored version of the non-parametric Data Envelopment Analysis model, we account for the large heterogeneity in research output and the individual researcher preferences by endogenously weighting the various output dimensions. The approach offers three important advantages compared to the traditional approaches: (1) flexibility in the aggregation of different research outputs into an overall evaluation score; (2) a reduction of the impact of measurement errors and atypical observations; and (3) a correction for the influences of a wide variety of factors outside the evaluated researcher’s control. As a result, research evaluations are more effective representations of actual research performance. The methodology is illustrated on a data set of all faculty members at a large polytechnic university in Belgium. The sample includes questionnaire items on the motivation and perception of the researcher. This allows us to explore whether motivation and background characteristics (as age, gender, retention, etc.) of the researchers explain variations in measured research performance.
The authors develop a dynamic approach to measuring the evolution of comparative brand premium, an important component of brand equity. A comparative brand premium is defined as the pairwise price difference between two products being identical in every respect but brand. The model is based on hedonic regressions and grounded in economic theory. In constrast to existing approaches, the authors explicitly take into account and model the dynamics of the brand premia. By exploiting the premia’s intertemporal dependence structure, the Bayesian estimation method produces more accurate estimators of the time paths of the brand premia than other methods. In addition, the authors present a novel yet straightforward way to construct confidence bands that cover the entire time series of brand premia with high probability. The data required for estimation are readily available, cheap, and observable on the market under investigation. The authors apply the dynamic hedonic regression to a large and detailed data set about laser printers gathered on a monthly basis over a four-year period. It transpires that, in general, the estimated brand premia change only gradually from period to period. Nevertheless the method can diagnose sudden downturns of a comparative brand premium. The authors’ dynamic hedonic regression approach facilitates the practical evaluation of brand management.
Undergraduates expressed their attitudes about a product after being exposed to a magazme ad under conditions of either high or low product involvement. The ad contained either strong or weak arguments for the product and featured either prominent sports celebrities or average citizens as endorsers. The manipulation of argument quality had a greater impact on attitudes under high than low involve- ment, but the manipulation of product endorser had a greater impact under low than high involvement. These results are consistent with the view that there are two relatively distinct routes to persuasion.
Proposes a theory of motivation and emotion in which causal ascriptions play a key role. Evidence is presented indicating that in achievement-related contexts there are a few dominant causal perceptions, and it is suggested that the perceived causes of success and failure share the 3 common properties of locus, stability, and controllability, with intentionality and globality as other possible causal structures. The perceived stability of causes influences changes in expectancy of success; all 3 dimensions of causality affect a variety of common emotional experiences, including anger, gratitude, guilt, hopelessness, pity, pride, and shame. Expectancy and affect, in turn, are presumed to guide motivated behavior. The theory therefore relates the structure of thinking to the dynamics of feeling and action. Analysis of a created motivational episode involving achievement strivings is offered, and numerous empirical observations are examined from this theoretical position. The strength of the empirical evidence and the capability of this theory to address prevalent human emotions are stressed, and examples of research on parole decisions, smoking cessation, and helping behavior are presented to illustrate the generalizability of the theory beyond the achievement-related theoretical focus. (3½ p ref) (PsycINFO Database Record (c) 2012 APA, all rights reserved)
Internet firms charge a wide range of prices for homogeneous products, and high-priced firms remain high-priced and low-priced firms remain low-priced over long periods. One explanation is that high-price firms are charging a premium for superior service. An alternative, price-dispersion explanation is that firms vary the prices for informed and uniformed consumers (Salop and Stiglitz, 1977) or serious shoppers and others (Wilde and Schwartz, 1979). The pricing pattern for a digital camera and a flatbed scanner is consistent with the price-dispersion model and inconsistent with the service-premium hypothesis.
Previous research has examined whether price dispersion exists in theoretically highly efficient Internet markets. However, much of the previous work has been focused on industries with low cost and undifferentiated products. In this paper, we examine the presence of price dispersion and product differentiation using data on the airline ticket offerings of online travel agents (OTAs). We find that different OTAs offer tickets with substantially different prices and characteristics when given the same customer request. Some of this variation appears to be due to product differentiation-different OTAs specialize by systematically offering different trade-offs between ticket price and ticket quality (minimizing the number of connections, matching requested departure and return time). However, even after accounting for differences in ticket quality ticket prices vary by as much as 18% across OTAs. In addition, OTAs return tickets that are strictly inferior to the ticket offered by another OTA for the same request between 2.2% and 28% of the time. Overall, this suggests the presence of both price dispersion and product differentiation in the online travel market.
A model expressing the relation between gains to search and a consumer's preference function is developed. For four of five appliances to which the model was applied, extensive search would not be worthwhile for a consumer whose preferences approximate the market hedonic price function.
The objectives of this paper were to investigate price-quality relations for durable goods over an extended period of time and to determine if there had been any improvements in price-quality relations in recent years. Durable goods were selected since they are expensive, infrequently purchased items, and are hence more likely to stimulate the development of an expert buyer's market. The relation between price and product quality was measured using data fromConsumer Reports from 1970–1977. The results were compared to an earlier study by Morris and Bronson which usedConsumer Reports data from 1960–1967. A comparison of data for the two time periods showed an increase in the percentage of significant correlations but a decline in the median correlation coeffizient. On the whole, it was concluded that price-quality relations in the two time periods did not differ to any great extent. In addition, there was no significant improvment in price-quality relations from 1970–1977.
Software agents help automate a variety of tasks including those involved in buying and selling products over the Internet. This paper surveys several of these agent-mediated electronic commerce systems by describing their roles in the context of a Consumer Buying Behavior (CBB) model. The CBB model we present augments traditional marketing models with concepts from Software Agents research to accommodate electronic markets. We then discuss the variety of Artificial Intelligence techniques that support agent mediation and conclude with future directions of agent-mediated electronic commerce research.
A local consumer market is informationally imperfect and welfare-reducing to the extent that it is characterized by extensive price dispersion unexplained by utility-conferring properties of the product. This article reports a study to ascertain the extent of informational imperfections for 17 representative products in Syracuse, New York. Except for food, most products exhibited extensive and welfare-reducing price dispersion. The article also reports on a pilot investigation of consumers' perceptions, finding them to be mostly inaccurate (except for food) and typically underestimated. The study findings suggest that consumers are both victims of and contributors to informationally imperfect markets. The paper concludes with a discussion of policy implications.
It has been hypothesized that the online medium and the Internet lower search costs and that electronic markets are more competitive than conventional markets. This suggests that price dispersion - the distribution of prices of an item indicated by measures such as range and standard deviation - of an item with the same measured characteristics across sellers of the item at a given point in time for identical products sold by e-tailers online (on the Internet) should be smaller than it is offline, but some recent empirical evidence reveals the opposite. A study by Smith et al. (2000) speculates that this is due to heterogeneity among e-tailers in such factors as shopping convenience and consumer awareness. Based on an empirical analysis of 105 e-tailers comprising 6739 price observations for 581 items in eight product categories, we show that online price dispersion is persistent, even after controlling for e-tailer heterogeneity. Our general conclusion is that the proportion of the price dispersion explained by e-tailer characteristics is small. This evidence is contrary to the hypothesis that search costs in online markets are low, or that online markets are highly competitive. The results also show that after controlling for differences in e-tailer service quality, prices at pure play e-tailers are equal to or lower than those at bricks-and-clicks e-tailers for all categories except books and computer software.
We investigate how online price dispersion has evolved since the bursting of the Internet bubble by comparing price dispersion levels in years 2000, 2001, and 2003 and between multi-channel and pure play e-tailers. The results show that although online price dispersion declined between 2000 and 2001 when there was a shakeout in Internet retailing, it increased from 2001 to 2003, the post bubble period, in particular, for desktop computers, laptop computers, PDAs, electronics and software. The proportion of items for which price dispersion at multi-channel retailers was higher than that at pure play e-tailers, increased steadily during 2000-2003. These findings suggest that online price dispersion is persistent even as Internet markets mature.
Data Envelopment Analysis has now been extensively applied in a range of empirical settings to identify relative inefficiencies, and provide targets for improvements. It accomplishes this by developing peer groups for each unit being operated. The use of categorical variables is an important extension which can improve the peer group construction process and incorporate "on-off" characteristics, e.g., presence of drive-in window or not in a banking network. It relaxes the stringent need for factors to display piecewise constant marginal productivities. In so doing, it substantially strengthens the credibility of the insights obtained. The paper treats the cases when the categorical variable can be controllable or uncontrollable by the manager, for the cases of technical and scale inefficiency. The approach is illustrated using real data.
In management contexts, mathematical programming is usually used to evaluate a collection of possible alternative courses of action en route to selecting one which is best. In this capacity, mathematical programming serves as a planning aid to management. Data Envelopment Analysis reverses this role and employs mathematical programming to obtain ex post facto evaluations of the relative efficiency of management accomplishments, however they may have been planned or executed. Mathematical programming is thereby extended for use as a tool for control and evaluation of past accomplishments as well as a tool to aid in planning future activities. The CCR ratio form introduced by Charnes, Cooper and Rhodes, as part of their Data Envelopment Analysis approach, comprehends both technical and scale inefficiencies via the optimal value of the ratio form, as obtained directly from the data without requiring a priori specification of weights and/or explicit delineation of assumed functional forms of relations between inputs and outputs. A separation into technical and scale efficiencies is accomplished by the methods developed in this paper without altering the latter conditions for use of DEA directly on observational data. Technical inefficiencies are identified with failures to achieve best possible output levels and/or usage of excessive amounts of inputs. Methods for identifying and correcting the magnitudes of these inefficiencies, as supplied in prior work, are illustrated. In the present paper, a new separate variable is introduced which makes it possible to determine whether operations were conducted in regions of increasing, constant or decreasing returns to scale (in multiple input and multiple output situations). The results are discussed and related not only to classical (single output) economics but also to more modern versions of economics which are identified with "contestable market theories."
We propose that market characteristics interact with retailer characteristics to determine online prices. The retailer characteristics examined include—service quality of a retailer, channels of transaction provided by a retailer and the size of a retailer. The market characteristics capture the level and nature of competition, and the price level of a product. We utilize a Hierarchical Linear Model (HLM) framework for capturing and testing the proposed interactions. The better fit between the model and the online market structure is reflected by a twenty-five percent increase in explainable price dispersion over results from comparable studies. Our study demonstrates that while retailer characteristics do impact online prices, this influence is significantly enhanced or diminished by the accompanying market characteristics.
This paper presents an approach for determining clusters of customer agents having both similar interests and buying behaviour.
On the one hand, a seller can exploit such a clustering for improving its activities, e.g. for adapting the presentation of
its Web Site or for proposing suitable offers to each agent cluster. On the other hand, a customer agent can realize with
the other agents of its cluster various kinds of collaboration. In our approach, each agent is provided with an ontology that
representing interests and behaviour of its human owner and the clustering technique we propose, that is performed at two
levels of detail, is based on the extraction of semantic similarities between agent ontologies.
This paper proposes a formal model of agent ontologies, suitable to represent the realities of both customers and sellers in a B2C electronic commerce scenario. This model is capable of describing the entities involved in the above realities (products, product features, product categories) as well as the behaviour of customers and sellers in performing their activities. A system architecture, based on the presented ontology model, is also briefly described.
To evaluate the electrophysiological changes in patients with acute tetrodotoxin (TTX) poisoning from ingestion of globefish (Tetraodontidae) patients exposed to TTX were compared with age-matched controls. The cohort of TTX-poisoning cases was clinically subdivided into mild, moderate, or severe cases. The motor nerve conduction velocity (MCV), sensory nerve conduction velocity (SCV), F-wave, H-reflex, and somatosensory-evoked potentials (SEP) of the median, ulnar, and common peroneal nerve (CPN) were determined using established techniques. Four of the 64 (6.3%) TTX-poisoning cases died and were omitted from the final analysis. The MCV and SCV of the median, ulnar, and CPN nerves in all the TTX-poisoning cases were significantly slower than the healthy controls. Severe cases of TTX poisoning had more significant reduction in nerve function. Thus, electroneurophysiological analysis could be used to determine the extent, course, and range of nerve system damage in patients with acute TTX poisoning.
The identification of sellers and the discovery of their prices is given as an example of the role of the search for information in economic life.
I. Introduction, 189.—II. Equilibria in models without learning—the case of knowledge, 191.—III. Equilibrium in models with
learning, 196.—IV. Empirically observed distributions of prices quoted by different sellers, 204.—V. Qualifications, implications,
and conclusions, 205.
Economic theory indicates that E-retailers competing at price comparison sites, such as Shopper.com, must charge prices that cannot be systematically predicted by their rivals. Consistent with theory, we find significant variation in the identity of the lowprice firm as well as the level of the lowest price for 36 of the best-selling consumer electronics products sold at Shopper.com between November 1999 and May 2001. The observed pricing patterns can be explained by firms engaging in short-term price promotions in an attempt to avoid the deleterious outcome associated with price competition. Based on our arguments and the evidence presented, the managerial implications are clear: Strategic unpredictability in prices—through the use of hit and run sales—is a widely used and effective weapon for avoiding all-out price competition in online markets.
Banker (1984) introduced the idea that the sum of the intensity variables in the DEA (Data Envelopment Analysis) model can be used to identity returns to scale. A counterexample in Chang and Guh (1991) shows that Banker’s method may fail. This prompted R. D. Banker and R. M. Thrall [Eur. J. Oper. Res. 62, No. 1, 74-84 (1992; Zbl 0760.90001)] to develop an alternative approach to estimate scale efficiency using DEA. Seemingly unaware of the work by Byrnes, Färe and Grosskopf (1984), Färe, Grosskopf and Lovell (1985, 1994) and Färe and Grosskopf (1985), etc. on the same topic, their ‘new’ approach is very similar to the methodology originated in these references. The purpose of this comment is to make our method known and to contrast it to the Banker and Thrall (1992) approach.
This paper examines four million daily price observations for more than 1,000 consumer electronics products on the price comparison site http://Shopper.com . We find little support for the notion that prices on the Internet are converging to the 'law of one price.' In addition, observed levels of price dispersion vary systematically with the number of firms listing prices. The difference between the two lowest prices (the 'gap') averages 23 per cent when two firms list prices, and falls to 3.5 per cent in markets where 17 firms list prices. These empirical results are an implication of a general 'clearinghouse' model of equilibrium price dispersion. Copyright Blackwell Publishing Ltd. 2004.