Internet Auctions and Frictionless Commerce: Evidence from the Retail Gift Card Market

Internet Auctions and Frictionless Commerce: Evidence from the Retail Gift Card Market This study investigates the pricing of retail gift cards on eBay. We find substantially less price dispersion than previously documented in other online markets for consumer goods. As gift cards are homogenous goods with clearly defined value, this suggests that greater price dispersion found in other markets may be due to unobservable differences in product characteristics, or from lacking the competitive nature of auction environments. Additionally, gift cards for the discount retailer Wal-Mart exhibit less price dispersion than other large retailers’ gift cards, consistent with the perception that greater search by price-sensitive shoppers can lead to less friction in markets. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Internet Auctions and Frictionless Commerce: Evidence from the Retail Gift Card Market

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Publisher
Springer Journals
Copyright
Copyright © 2010 by Springer Science+Business Media, LLC.
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-010-9248-6
Publisher site
See Article on Publisher Site

Abstract

This study investigates the pricing of retail gift cards on eBay. We find substantially less price dispersion than previously documented in other online markets for consumer goods. As gift cards are homogenous goods with clearly defined value, this suggests that greater price dispersion found in other markets may be due to unobservable differences in product characteristics, or from lacking the competitive nature of auction environments. Additionally, gift cards for the discount retailer Wal-Mart exhibit less price dispersion than other large retailers’ gift cards, consistent with the perception that greater search by price-sensitive shoppers can lead to less friction in markets.

Journal

Review of Industrial OrganizationSpringer Journals

Published: May 11, 2010

References

  • Price dispersion in the small and in the large: Evidence from an internet price comparison site
    Baye, M.; Morgan, J.; Scholten, P.

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