Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/93414
Authors: 
Ellison, Sara
Snyder, Christopher M.
Year of Publication: 
2014
Series/Report no.: 
CESifo Working Paper 4655
Abstract: 
We study competition among a score of firms participating in an online market for a commodity computer component. Firms were able to adjust prices continuously; prices determined how the firms were ranked and listed (lowest price listed first), with better ranks contributing to firms' sales. Using a year's worth of hourly data for individual firms, we estimate a model of price adjustment, characterizing the factors driving price changes and measuring how much these factors differ across firms (i.e., strategy heterogeneity). We find evidence of managerial inattention as a cause of the price inertia observed in the market. Using separate estimates of the pricing model for groups of related firms, we simulate counterfactuals involving different mixes of these groups.
JEL: 
L11
C73
D21
L81
Document Type: 
Working Paper

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