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Pricing Behavior Of A Conventional Retailer'S Online-Branch

Author

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  • DING LU

    (Department of Economics, National University of Singapore, AS2 Level 6, 1 Arts Link, Singapore 117570, Singapore)

Abstract

This paper presents a simple model to interpret the business rationale for a conventional retailer with market power to develop its online business in the presence of an e-commerce rival. The model shows that the online branch of a conventional retailer tends to sell products at a higher price level than its dot.com rival. The participation of the conventional retailer in the online market may increase the average online prices. The conventional retailer will compete aggressively in price only when the cost-saving benefit of online sale is sufficiently large.

Suggested Citation

  • Ding Lu, 2003. "Pricing Behavior Of A Conventional Retailer'S Online-Branch," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 48(02), pages 173-179.
    • Handle: RePEc:wsi:serxxx:v:48:y:2003:i:02:n:s0217590803000700
    DOI: 10.1142/S0217590803000700
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    References listed on IDEAS

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    1. Erik Brynjolfsson & Michael D. Smith, 2000. "Frictionless Commerce? A Comparison of Internet and Conventional Retailers," Management Science, INFORMS, vol. 46(4), pages 563-585, April.
    2. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, April.
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    Keywords

    E-commerce; Online retail prices;

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