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PRICE, QUALITY, AND SERVICE ON THE INTERNET: SENSE AND NONSENSE
Author(s) -
Koch James V.,
Cebula Richard J.
Publication year - 2002
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1093/cep/20.1.25
Subject(s) - common value auction , the internet , price dispersion , microeconomics , economics , quality (philosophy) , reservation price , intermediary , service (business) , mid price , business , product (mathematics) , price level , advertising , monetary economics , marketing , economy , philosophy , epistemology , world wide web , computer science , geometry , mathematics
Faster, frictionless, cheaper, better: these are said to be the hallmarks of economic activity on the Internet. Search theory suggests use of the Net could reduce the prices consumers pay, but product branding, price discrimination based on data mining, and auctions may raise prices. The Net has lowered most prices, but raised others, even when shop bots are used. Price dispersion is greater on the Net, and Net sellers change their prices more often. The role of intermediaries has not been reduced. The quality of service is idiosyncratic and highly variable. The Net is a new and distinctive avenue of commerce, but those who argue it has invalidated conventional economic principles are well off base.