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dc.contributor.authorLoginova, Oksanaeng
dc.date.issued2007eng
dc.description.abstractAlthough the Internet reduces market frictions by making it easier for consumers to obtain information about prices and product offerings, goods sold by electronic firms are not perfect substitutes for otherwise identical goods sold by conventional stores. Online purchases, due to non-zero shipping time, are associated with waiting costs, and they do not allow consumers to inspect the product prior to purchase. Visiting a conventional store, on the other hand, involves positive travelling costs. A model extending the circular city paradigm with two types of firms, conventional and electronic, is studied. Under the benchmark setting with only conventional firms in the market, each consumer visits the nearest store and purchases the product there. When electronic firms enter the market, an intriguing type of market segmentation may arise. First, each consumer travels to the nearest conventional store to "try on'' the product. Second, conventional retailers increase their prices and sell the good only to consumers who discover that they have high valuations; consumers with low valuations return "home'' and order the good online. In spite of the increased competition from Internet retailers, welfare decreases.eng
dc.identifier.citationDepartment of Economics, 2007eng
dc.identifier.urihttp://hdl.handle.net/10355/2561eng
dc.publisherDepartment of Economicseng
dc.relation.ispartofEconomics publicationseng
dc.relation.ispartofcommunityUniversity of Missouri-Columbia. College of Arts and Sciences. Department of Economicseng
dc.relation.ispartofseriesWorking papers (Department of Economics);WP 07-15eng
dc.rightsOpenAccess.eng
dc.rights.licenseThis work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 License.
dc.source.urihttp://economics.missouri.edu/working-papers/2007/wp0715_loginova.pdfeng
dc.subjectelectronic commerceeng
dc.subjectoligopoly pricingeng
dc.subjectmarket segmentationeng
dc.subjectspatial competitioneng
dc.subject.lcshElectronic commerceeng
dc.subject.lcshOligopolieseng
dc.subject.lcshMarket segmentationeng
dc.subject.lcshCompetitioneng
dc.titleReal and Virtual Competitioneng
dc.typeWorking Papereng


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