Online Shopping Intermediaries: The Strategic Design Of Search Environments

Keywords

Competitive Strategy; Internet marketing; Online shopping intermediaries; Pricing

Abstract

An online shopping intermediary is an Internet platform on which consumers and third-party sellers transact. Shopping intermediaries provide a search environment (e.g., search AIDS) to lower the search costs incurred by consumers when finding and evaluating sellers' products. We study strategic incentives of an intermediary in the design of its search environment as a means to ease search costs. An important aspect of our analysis is that consumers optimally decide how many sellers to evaluate and how deeply (e.g., number of attributes) to evaluate each of them. We find that the equilibrium search environment embeds sufficiently high search costs to prevent consumers from evaluating too many sellers, but not too high to cause them to evaluate sellers' products at partial depth.

Publication Date

4-1-2016

Publication Title

Management Science

Volume

62

Issue

4

Number of Pages

1064-1077

Document Type

Article

Personal Identifier

scopus

DOI Link

https://doi.org/10.1287/mnsc.2015.2176

Socpus ID

84964344220 (Scopus)

Source API URL

https://api.elsevier.com/content/abstract/scopus_id/84964344220

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