| Competition and seller strategies in electronic markets have been of interest long before the Internet. As electronic commerce develops and matures, researchers now have the capability to test the theories of electronic markets. This dissertation examines how Internet technology can increase or decrease the transfer speed and amount of various types of information, thus changing information asymmetry between buyers and sellers and among competitors. These changes in information asymmetry result in different strategies for optimal success in electronic markets. In three empirical essays, this dissertation examines how changes in information asymmetry from Internet technology motivate different strategies and behaviors sellers. The data for the empirical examinations in this dissertation were gathered using customized data-collecting agents, written in Java, that gather real transaction data with relatively little time or expense.; The first essay examines 70,552 daily prices, from 169 products and 53 firms in the online bookselling industry (e.g., Amazon, Borders.com, and BN.com) and the online music CD industry (e.g., CDNow, 800.com, Amazon, and BN.com). The analysis, done using vector autoregression, concludes that Bertrand competition, often viewed by researchers as the only viable competitive online strategy, is insufficient to explain the myriad of competitive behaviors exhibited by online vendors.; The second essay examines 1,653 price changes from online booksellers and online music CD sellers. Firm, competitor, and industry characteristics are used to successfully predict whether a firm chooses between intense competition, tacit collusion, or neither in the bookselling and CD industries. The second essay concludes that firms respond in a modified “tit-for-tat” manner to competitors, and that firms that develop systems and strategies to quickly respond to price promotions reduce the likelihood of intense competition.; The third essay investigates 10,260 online auctions at eBay and describes how Internet technology increases sellers' anonymity to other sellers and buyers. This increase in information asymmetry motivates shilling , which is an opportunistic behavior where a seller bids on his own item in an online auction. Furthermore, the intended victims of this shilling are not legitimate bidders, but instead online sellers use shilling to avoid paying auction house fees. |
