Information gatekeepers on the internet and the competitiveness of homogeneous product markets (2001)
| Venue: | American Economic Review |
| Citations: | 47 - 2 self |
BibTeX
@ARTICLE{Baye01informationgatekeepers,
author = {R. Baye and John Morgan},
title = {Information gatekeepers on the internet and the competitiveness of homogeneous product markets},
journal = {American Economic Review},
year = {2001},
volume = {91},
pages = {454--474}
}
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Abstract
We examine the equilibrium interaction between a market for price infor-mation (controlled by a gatekeeper) and the homogenous product market it serves. The gatekeeper charges fees to …rms that advertise prices on its Internet site and to consumers who access the list of advertised prices. Gatekeeper pro…ts are maximized in an equilibrium where (a) the prod-uct market exhibits price dispersion; (b) access fees are su¢ciently low that all consumers subscribe; (c) advertising fees exceed socially optimal levels, thus inducing partial …rm participation; and (d) advertised prices are below unadvertised prices. Introducing the market for information has ambiguous social welfare e¤ects.
