|
|
|
The Analysis of Reputation and Network Externalities of Price Dispersion in OnLine Market
|
WANG Qiang,CHEN Hongmin,GUO Bing
|
(Antai College of Economics & Management, Shanghai Jiaotong University, Shanghai 200052, China)
|
|
|
|
Abstract According to the searching theory, this paper explored the effects of searching cost on equilibrium price and price dispersion following the variability of sellers’ reputation and network externalities. The results show that higher searching cost can make sellers with different reputation coexist in the online markets; in order to compete with the higher reputation sellers, sellers with lower reputation have to reduce the products price and thus leads to price dispersion; The increasing of network externalities can lead to more price dispersion. Furthermore, the advertisement by higherreputation sellers can improve buyers’ searching efficiency and reduce buyers’ searching activities. In order to compete with higherreputation firms, the lowerreputation sellers have to reduce the price and thus the price dispersion becomes more serious.
|
|
Received: 06 January 2010
Published: 31 December 2010
|
|
|
|
|
|
| No related articles found! |
|
|
|
|
