Breaking Down Online Price Dispersion

Open Access
Author:
Rajendra, Shubhsri
Area of Honors:
Economics
Degree:
Bachelor of Science
Document Type:
Thesis
Thesis Supervisors:
  • Peter William Newberry, Thesis Supervisor
  • Russell Paul Chuderewicz, Honors Advisor
  • James R. Tybout, Faculty Reader
Keywords:
  • Price dispersion
  • Online Price Dispersion
  • Pricing online
  • breaking down prices
  • electronic tablets
  • Electronics
  • Tmall
  • Hedonic regression
  • Price discrepancy
  • Measuring price dispersion
Abstract:
Price dispersion is defined as a situation where identical, or similar, products are sold by sellers at different prices. In a world without any price dispersion, we would expect homogeneous prices across all sellers especially online since there are essentially no search costs involved. However, that is not what is observed in real life, where products with identical characteristics are sold at varying prices. This paper attempts to break down the cause of this dispersion by analyzing what leads to online price dispersion, how the price of the product is affected by product characteristics, the seller characteristics, market variables etc.