Abstract
The conventional wisdom is that Internet commerce substantially reduces the transaction costs for comparison shopping, which in turn intensifies price competition. However, the technology of the Internet marketplace offers retailers tools with the potential to blunt some of this competition. This paper explores the competitive impact of an electronic low price matching policy when firms can track customer search behavior. Using controlled laboratory techniques, we find that through the use of low price matching sellers are able to dampen some of the intense competition spawned when a large proportion of consumers comparison shop.
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Deck, C.A., Wilson, B.J. The Effectiveness of Low Price Matching in Mitigating the Competitive Pressure of Low Friction Electronic Markets. Electronic Commerce Research 2, 385–398 (2002). https://doi.org/10.1023/A:1020567515249
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DOI: https://doi.org/10.1023/A:1020567515249