| Price rigidity involves the observation of prices that do not change with the regularity predicted by standard economic theory. As IT changes the process by which strategic pricing decisions are made and implemented in business operations, there is a need to develop a more substantial managerial understanding of firm pricing in production process terms. In the 1990s, technology-driven pricing was largely the domain of the airlines, hotels and rental car companies, with the practice of revenue yield management. However, now it is possible for bricks-and-clicks firms, and even traditional retailers, to implement systems that permit significant adjustments to be made to prices in situations where menu costs previously made rapid price changes difficult to achieve in an economical way.;This dissertation is composed of three essays involving theory development and empirical research on the price rigidity in e-commerce. The first essay, entitled "An Analysis of Daily Price Change Activity in Internet Retailing ," is a case study exploring daily patterns of Internet pricing for the two major online bookstores, Amazon.com and BN.com at a micro-level of analysis, informing our understanding of how rigid prices are on the Internet. In the second essay, entitled "Price Rigidity in Internet-Based Selling: Theory and Evidence," I propose and evaluate a research framework to examine different theories of price rigidity. I also explore what variables can explain the observed empirical regularities and variations in price adjustment patterns of Internet-based retailers. Finally, my third essay, entitled " Price Points and Price Rigidity under Rational Inattention," investigates the practical importance of price points and their link to price rigidity. I also provide a rational choice explanation for their existence, based on rational inattention theory.;This dissertation draws upon theoretical perspectives that are largely new to the field of Information Systems (IS), but that offer rich opportunities for theory building and empirical research in settings that will be of high interdisciplinary interest. Such interdisciplinary studies, I believe, will provide a distinctive foundation for IS research and serve as a guide to research for a variety of new economic phenomena in economies that are influenced by firm investments in Internet technology. |
