Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/24019
Authors: 
Häring, Julia
Year of Publication: 
2003
Series/Report no.: 
ZEW Discussion Papers 03-68
Abstract: 
This paper analyses market efficiency and the role of the virtual location in digital markets using a data set containing more than 23,000 price observations from the online market for contact lenses as well as detailed information about online retailer and product characteristics. The data allow to implement and test the concept of virtual location. The empirical results reveal evidence for lower prices and less price dispersion among e-retailers in comparison to hybrid retailers, which supports the hypothesis of enhanced market efficiency in electronic markets. Furthermore, the results show that an online shop?s virtual location influences its prices and that differences in prices are partially driven by differentiation in retailer service. A decomposition of the price differential reveals that there may indeed be a competition effect.
Subjects: 
electronic markets
efficiency
virtual location
pricing
JEL: 
D43
L11
C23
L81
Document Type: 
Working Paper

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