Date of this Version
Quantitative Marketing and Economics
A rich theory literature predicts mixed strategies in posted prices due to standard price discrimination, search frictions, and various other rationales. While typically interpreted as implying occasional sales or price dispersion, online marketplaces enable a firm to truly use randomization as a tool in pricing, and so such behavior should be expected to arise in online settings. We investigate a case of mixed pricing across a large subset of products on a major e-commerce website. We first test for randomizing behavior, and then construct a model of price discrimination that would generate randomization as optimal behavior. We estimate the model and use it to assess pricing effects of a proposed merger in the industry.
This is a pre-publication version. The final publication is available at Springer via http://dx.doi.org/10.1007/s11129-016-9168-3
price discrimination, online markets, merger analysis
Seim, K., & Sinkinson, M. (2016). Mixed Pricing in Online Marketplaces. Quantitative Marketing and Economics, 14 (2), 129-155. http://dx.doi.org/10.1007/s11129-016-9168-3
Applied Behavior Analysis Commons, Behavioral Economics Commons, Business Administration, Management, and Operations Commons, Cognitive Psychology Commons, Management Sciences and Quantitative Methods Commons, Marketing Commons, Sales and Merchandising Commons
Date Posted: 15 June 2018
This document has been peer reviewed.