Essays on online price comparison site competition

This dissertation consists of essays that examine competition, consumer activity and pricing strategies on highly competitive Internet price comparison sites. These markets offer consumers a high level of information at low cost, making them some of the most competitive markets in a retail setting. Chapter 2 uses a unique data set to explore the elasticity of a good on an electronic marketplace in the existence of a large cost shock. Estimates of the elasticity of demand are garnered for both the click elasticity and the sales elasticity using sales data from an online seller. Estimates of the click elasticity and the sales elasticity for the six month period are -6.6 and -5.0, and are similar under all the specifications, indicating that using clicks as a proxy for sales is a reasonable way of estimating demand in online markets.;Chapter 3 analyzes the impact of changes in the wholesale prices on retail prices and price dispersion on a price comparison site. The results complement existing research that shows that prices tend to be sticky even online, where menu costs are presumably quite low. Heterogeneous reactions to cost changes are an explanation for the significant and persistent price dispersion that appears in product markets. These findings suggest that wholesale cost changes explain some, but not all, of the price dispersion observed in online markets.;Chapter 4 examines the relationship between price comparison sites and the retailers that list prices on them. A group of 228 retailers are tracked over a 30 month period to identify which ones remain selling on the price comparison site. The key determinants are how well-known the retailer is, the pricing strategy, the range of products offered and the service ratings.;Chapter 5 provides a managerial case study of the online price comparison market and profiles the experiences of Roberts Imaging, a brick and mortar specialty retailer that ventures into the online market. Chapter 6 provides a detailed summary of the online pricing and sales data that serves as the basis for the chapters 2-5.