Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/246762 
Year of Publication: 
2020
Series/Report no.: 
HFI Working Paper No. 8
Publisher: 
Institute of Retail Economics (HFI), Stockholm
Abstract: 
Theories of intertemporal price discrimination imply that prices must be chosen using mixed strategies, with retailers changing their prices randomly over time. Otherwise, consumers will learn which retailer has the lowest price, and eventually, all customers will patronize the lowest price retailer, or all retailers will charge the same price. We test whether price dispersion is explained by intertemporal price discrimination strategies using a dataset of identical products sold through the PriceSpy price comparison website. Our results show that there are clusters of retailers with similar pricing within each cluster but different price levels between clusters even after controlling for retailer heterogeneity. Retailers also remain in the same price cluster over time, suggesting that consumers have ample opportunities to learn which retailers belong to which price cluster. Intertemporal price discrimination is thus unlikely to have caused the observed price dispersion.
Subjects: 
Clustering
intertemporal price discrimination
online retailing
e-commerce
price comparison websites
JEL: 
C38
D22
D83
L81
Document Type: 
Working Paper

Files in This Item:
File
Size
422.33 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.