Wednesday, February 6, 2019
Ronayne, David studies Price Comparison website.
Abstract: The large and growing industry of price comparison websites (PCWs) or ‘web aggregators’ is poised to benefit consumers by increasing competitive pricing pressure on firms by acquainting shoppers with more prices. However, these sites also charge firms for sales, which feeds back to raise prices. I investigate the impact of introducing PCWs to a market for a homogeneous good. I find that introducing a single PCW increases prices for all consumers, both those who use the sites, and those who do not. Under competing PCWs, prices tend to rise with the number of PCWs. I also conduct various extensions and use the analysis to discuss relevant industry practices and policies.