HFI Working Papers,
Institute of Retail Economics (Handelns Forskningsinstitut)

Abstract: Theories of intertemporal price discrimination imply that prices must be chosen using mixed strategies, with retailers changing their prices randomly over time. Otherwise, consumers will learn which retailer has the lowest price, and eventually, all customers will patronize the lowest price retailer, or all retailers will charge the same price. We test whether price dispersion is explained by intertemporal price discrimination strategies using a dataset of identical products sold through the PriceSpy price comparison website. Our results show that there are clusters of retailers with similar pricing within each cluster but different price levels between clusters even after controlling for retailer heterogeneity. Retailers also remain in the same price cluster over time, suggesting that consumers have ample opportunities to learn which retailers belong to which price cluster. Intertemporal price discrimination is thus unlikely to have caused the observed price dispersion.

Keywords: Clustering; intertemporal price discrimination; online retailing; e-commerce; price comparison websites

JEL-codes: C38; D22; D83; L81

12 pages, February 13, 2020

Full text files

clusteringhfiwp8.pdf  Full text

Download statistics

• Institute of Retail Economics (Handelns Forskningsinstitut)
• Home page for this series

Questions (including download problems) about the papers in this series should be directed to Hans Seerar Westerberg ()
Report other problems with accessing this service to Sune Karlsson ().

This page generated on 2024-02-05 17:11:38.