Price dispersion on the internet: Good firms and bad firms

Kathy Baylis, Jeffrey M. Perloff

Research output: Contribution to journalArticlepeer-review


Internet firms charge a wide range of prices for homogeneous products, and high-priced firms remain high-priced and low-priced firms remain low-priced over long periods. One explanation is that high-price firms are charging a premium for superior service. An alternative, price-dispersion explanation is that firms vary the prices for informed and uniformed consumers (Salop and Stiglitz, 1977) or serious shoppers and others (Wilde and Schwartz, 1979). The pricing pattern for a digital camera and a flatbed scanner is consistent with the price-dispersion model and inconsistent with the service-premium hypothesis.

Original languageEnglish (US)
Pages (from-to)305-324
Number of pages20
JournalReview of Industrial Organization
Issue number3
StatePublished - Nov 1 2002
Externally publishedYes

ASJC Scopus subject areas

  • Economics and Econometrics
  • Strategy and Management
  • Organizational Behavior and Human Resource Management
  • Management of Technology and Innovation


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