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Price Setting in Online Markets: Does IT Click?

Yuriy Gorodnichenko, Viacheslav Sheremirov, Sasha Talavera Orcid Logo

Journal of the European Economic Association, Volume: 16, Issue: 6, Pages: 1764 - 1811

Swansea University Author: Sasha Talavera Orcid Logo

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DOI (Published version): 10.1093/jeea/jvx050

Abstract

Using a unique dataset of daily U.S. and U.K. price listings and the associated number of clicks for precisely defined goods from a major shopping platform, we shed new light on how prices are set in online markets, which have a number of special properties such as low search costs, low costs of mon...

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Published in: Journal of the European Economic Association
ISSN: 1542-4766 1542-4774
Published: 2018
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URI: https://cronfa.swan.ac.uk/Record/cronfa35956
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first_indexed 2017-10-07T18:59:04Z
last_indexed 2021-01-19T03:54:45Z
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spelling 2021-01-18T18:01:43.9705532 v2 35956 2017-10-07 Price Setting in Online Markets: Does IT Click? c33f8979a1b19d178652b3c848176829 0000-0002-4799-778X Sasha Talavera Sasha Talavera true false 2017-10-07 BAF Using a unique dataset of daily U.S. and U.K. price listings and the associated number of clicks for precisely defined goods from a major shopping platform, we shed new light on how prices are set in online markets, which have a number of special properties such as low search costs, low costs of monitoring competitors’ prices, and low costs of nominal price adjustment. We document that although online prices change more frequently than offline prices, they nevertheless exhibit relatively long spells of fixed prices. By many metrics, such as large size and low synchronization of price changes, considerable cross-sectional dispersion, and low sensitivity to predictable or unanticipated changes in demand conditions, online prices are as imperfect as offline prices. Our findings suggest a need for more research on the sources of price rigidities and dispersion, as well as on the relative role of menu and search costs in online-pricing frictions. Journal Article Journal of the European Economic Association 16 6 1764 1811 1542-4766 1542-4774 online markets, prices, price dispersion 1 12 2018 2018-12-01 10.1093/jeea/jvx050 COLLEGE NANME Accounting and Finance COLLEGE CODE BAF Swansea University 2021-01-18T18:01:43.9705532 2017-10-07T17:10:28.0965943 Faculty of Humanities and Social Sciences School of Management - Accounting and Finance Yuriy Gorodnichenko 1 Viacheslav Sheremirov 2 Sasha Talavera 0000-0002-4799-778X 3 0035956-07102017171421.pdf GST-PriceSettingOnline-JEEA.pdf 2017-10-07T17:14:21.2730000 Output 1399769 application/pdf Accepted Manuscript true 2020-01-10T00:00:00.0000000 true eng
title Price Setting in Online Markets: Does IT Click?
spellingShingle Price Setting in Online Markets: Does IT Click?
Sasha Talavera
title_short Price Setting in Online Markets: Does IT Click?
title_full Price Setting in Online Markets: Does IT Click?
title_fullStr Price Setting in Online Markets: Does IT Click?
title_full_unstemmed Price Setting in Online Markets: Does IT Click?
title_sort Price Setting in Online Markets: Does IT Click?
author_id_str_mv c33f8979a1b19d178652b3c848176829
author_id_fullname_str_mv c33f8979a1b19d178652b3c848176829_***_Sasha Talavera
author Sasha Talavera
author2 Yuriy Gorodnichenko
Viacheslav Sheremirov
Sasha Talavera
format Journal article
container_title Journal of the European Economic Association
container_volume 16
container_issue 6
container_start_page 1764
publishDate 2018
institution Swansea University
issn 1542-4766
1542-4774
doi_str_mv 10.1093/jeea/jvx050
college_str Faculty of Humanities and Social Sciences
hierarchytype
hierarchy_top_id facultyofhumanitiesandsocialsciences
hierarchy_top_title Faculty of Humanities and Social Sciences
hierarchy_parent_id facultyofhumanitiesandsocialsciences
hierarchy_parent_title Faculty of Humanities and Social Sciences
department_str School of Management - Accounting and Finance{{{_:::_}}}Faculty of Humanities and Social Sciences{{{_:::_}}}School of Management - Accounting and Finance
document_store_str 1
active_str 0
description Using a unique dataset of daily U.S. and U.K. price listings and the associated number of clicks for precisely defined goods from a major shopping platform, we shed new light on how prices are set in online markets, which have a number of special properties such as low search costs, low costs of monitoring competitors’ prices, and low costs of nominal price adjustment. We document that although online prices change more frequently than offline prices, they nevertheless exhibit relatively long spells of fixed prices. By many metrics, such as large size and low synchronization of price changes, considerable cross-sectional dispersion, and low sensitivity to predictable or unanticipated changes in demand conditions, online prices are as imperfect as offline prices. Our findings suggest a need for more research on the sources of price rigidities and dispersion, as well as on the relative role of menu and search costs in online-pricing frictions.
published_date 2018-12-01T03:44:53Z
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score 11.012678

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