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This study investigates whether online retailer reputation can influence their pricing strategy and thus provide an explanation for online price dispersion. Online comparison shopping services, such as BizRate.com, not only aggregate price information but also collect and publish consumer reviews and ratings of online retailers. Such reviews and ratings may be used as measures of retailer reputation. Our analysis of retailer reputation and prices on a set of electronic products showed that online retailers with better reputation charged higher prices. In addition, the effects of retailer reputation on pricing strategy were found to be more significant for higher valued products.

Retailer Reputation and Online Pricing Strategy.