Search and Product Differentiation at an Internet Shopbot
Preprint
- 1 January 2003
- preprint
- Published by Elsevier BV in SSRN Electronic Journal
Abstract
We estimate the magnitude of consumer search benefits and costs using data obtained from a major Internet shopbot. For the median consumer, the benefits to searching lower screens are $6.55 while the cost of an exhaustive search of the offers is a maximum of $6.45. We are also able to estimate price elasticities and find that they are relatively high compared to offline markets (-7 to -10 in our base model). Our results suggest that consumers face fairly high costs to search for information online, even in the "nearly perfect" market of the shopbot.Keywords
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