Electronic Commerce and Retail Channel Substitution

Tinbergen Institute Working Paper No. 02-042/1

41 Pages Posted: 15 May 2002

See all articles by Maarten Janssen

Maarten Janssen

University of Vienna - Faculty of Business, Economics, and Statistics

Rob van der Noll

Authority for Consumers & Markets (ACM)

Date Written: April 2002

Abstract

We analyze a market where firms compete in a conventional and an electronic retail channel. Consumers easily compare prices online, but some incur purchase uncertainties on the online channel. We investigate the market shares of the two retail channels and the prices that are charged. We find that the share of the electronic channel is decreasing in the size of the uncertainty. Furthermore, searching consumers do not always buy. They drop out when the uncertainty associated with buying online is not offset by a low price. Finally, the model exhibits price dispersion and the expected price is increasing in the magnitude of the online purchase uncertainty.

Keywords: E-Commerce, Internet, multichannel competition, price dispersion, online uncertainty, online confidence

JEL Classification: D43, L13, M30

Suggested Citation

Janssen, Maarten C. W. and van der Noll, Rob, Electronic Commerce and Retail Channel Substitution (April 2002). Tinbergen Institute Working Paper No. 02-042/1, Available at SSRN: https://ssrn.com/abstract=309679 or http://dx.doi.org/10.2139/ssrn.309679

Maarten C. W. Janssen (Contact Author)

University of Vienna - Faculty of Business, Economics, and Statistics ( email )

Vienna, A-1210
Austria

Rob Van der Noll

Authority for Consumers & Markets (ACM) ( email )

Muzenstraat 41
Den Haag, 2511 WB
Netherlands
+31 70 7222581 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
526
Abstract Views
2,647
rank
63,538
PlumX Metrics